Good day, and welcome to the CRH plc Q3 2024 Results Presentation. My name is Jay, and I'll be your operator today. At this time, I'd like to turn the conference over to Albert Manifold, CRH Chief Executive to begin the conference. Please go ahead, sir.

Good morning, everyone. Albert Manifold here, CRH Group Chief Executive. And you're all very welcome to our quarter three 2024 results presentation and conference call. Joining me on the call is Jim Mintern, Group CFO and CEO designate; Randy Lake, Chief Operating Officer; and Tom Holmes, Head of Investor Relations. Before we get started, I'll hand you over to Tom for some brief opening remarks.

Thanks, Albert. Hello, everyone. Before we begin today's proceedings, I'd like to draw your attention to Slide 1, shown here on screen. During today's 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 the factors outlined on this slide. For more details, please refer to this slide, our annual report, and other SEC filings, which are available on our website. I will now hand you back to Albert, Jim and Randy, to deliver some prepared remarks.

Thanks, Tom. Over the next 20 minutes or so, we'll take you through a brief presentation of the results we've published this morning, highlighting the key drivers of our operating performance for the third quarter of the year, our recent capital allocation activities, as well as providing you with an update on our expectations for the year as a whole. Based on the visibility that we have at this moment in time, we'll also share our thoughts on some of the trends we're seeing across our markets as we look ahead to 2025, and afterwards, we'll be available to take any questions that you may have. First, on Slide 3, let me take you through some of the key messages from this morning's announcement. I'm pleased to report another robust financial performance, underpinned by the benefits of our differentiated solution strategy. For the third quarter of the year, we delivered strong growth in all key financial metrics, supported by positive pricing momentum and our relentless focus on cost management, all despite having to contend with some significant weather disruptions in certain regions. Looking ahead to the remainder of the year and based on the current momentum that we see across our business, I'm pleased to say we are reaffirming the midpoint of our guidance. Assuming normal seasonal weather patterns and no major dislocations in the macroeconomic environment, we expect full year group adjusted EBITDA to be between $6.87 billion and $6.97 billion, representing another strong year of performance and double-digit growth for CRH. Regarding our strategic development and capital allocation activities, we remain focused on investing in attractive high-growth markets and building out our solutions capabilities to deliver further growth and value for our shareholders. Year-to-date, we have invested $4.6 billion on 35 acquisitions across materials, road and utility infrastructure, and outdoor living. I'm pleased to report that our Materials acquisitions in Texas and Australia, representing two of our largest investments this year, are performing well. The integration of these assets into existing businesses are well underway and are progressing as planned. We've also been active on the divestment front with proceeds of approximately $1.2 billion in the year-to-date. With regard to cash returns, the strength of our balance sheet also enables us to continue to return significant amounts of capital to our shareholders. Our ongoing share buyback program has returned approximately $1.2 billion so far this year. And today, we're commencing a further quarterly tranche of $300 million. In line with our policy of consistent long-term dividend growth, the Board has also declared a new quarterly dividend of $0.35 per share, representing an annualized increase of 5%. Turning to Slide 4 and our financial highlights for the third quarter of the year. Overall, a robust performance with revenues, adjusted EBITDA, margin, and EPS, all ahead of the prior year period. Total revenues of $10.5 billion were 4% ahead, reflecting a good underlying demand backdrop across our key markets, further commercial progress as well as contributions from acquisitions. This enabled us to deliver adjusted EBITDA of $2.5 billion, 12% ahead, and a further 170 basis points of margin expansion, a good performance in the context of some inflationary cost pressures. All of this translated into strong growth in our earnings per share, up 10% on the prior year period and 20% ahead on a 9-month basis. Now at this point, I'll hand you over to Randy, who will take you through the operating performance of each of our businesses.

Thanks, Albert. Hello, everyone. Turning to Slide 6 and beginning with Americas Materials Solutions, which delivered further growth and margin expansion in the period. Third quarter revenues and adjusted EBITDA were 4% and 16% ahead of prior year despite some significant weather disruption impacting our operations in the southern region of the U.S. Looking through the impact of adverse weather, the underlying demand backdrop across our key markets remains robust. Infrastructure, our largest end market, continues to be underpinned by the significant increase in state and U.S. federal funding through the IIJA. Less than 30% of highway funds in the IIJA have been deployed to date, highlighting the significant runway we have ahead of us. We also continue to see good levels of reindustrialization and onshoring activity, which is supporting growth in new build manufacturing facilities and data centers. Against the backdrop of continued inflation in raw materials, labor, and subcontracting costs, I'm pleased to see strong commercial discipline from our teams on the ground with positive pricing momentum across all product lines during the third quarter of the year. In Essential Materials, Q3 revenues were 5% ahead, supported by pricing growth in aggregates and cement of 10% and 9%. In Road Solutions, third quarter revenues increased by 4%, driven by improved pricing in asphalt and readymixed concrete. Our third quarter results also reflect good contributions from acquisitions, primarily our $2.1 billion acquisition of material assets in Texas. And I'm pleased to report that we're also making good progress on the synergies we identified. Together with disciplined cost control, operational efficiencies and the impact of a gain on certain land asset sales, we delivered 270 basis points of margin expansion compared to the prior year period. Looking ahead to the remainder of the year, I'm encouraged by the continued positive momentum in our backlogs, reflecting the robust infrastructure funding environment I mentioned earlier. Next to Americas Building Solutions on Slide 7, where our business delivered a resilient third quarter performance, supported by good contributions from acquisitions. Third quarter revenues for our Building & Infrastructure Solutions business were 3% ahead of the prior year, supported by significant IIJA funding for critical utility infrastructure and higher onshoring activity in the manufacturing sector. Q3 revenues in our Outdoor Living Solutions business were in line with the prior year, benefiting from its exposure to more resilient residential repair and remodel activity. And as you can see on this slide, our third quarter profitability was behind a strong prior year comparative. On a 9-month basis, our adjusted EBITDA was just 2% behind, a good performance in the context of some adverse weather conditions and continued subdued demand in the new build residential segment. Moving across to Europe on Slide 8 and first to Europe Materials Solutions. Overall, our business delivered a strong performance, supported by continued pricing progress as well as the contribution from our recent acquisition of Adbri, resulting in third quarter revenue and adjusted EBITDA, 7% and 24% ahead of the prior year. In Central and Eastern Europe, demand continues to be underpinned by good levels of public and private funding for infrastructure and non-residential construction activity. While in Western Europe, activity levels continue to be impacted by subdued residential demand, particularly in the new build segment. I'm also pleased to see further margin expansion, 280 basis points ahead of the prior year reflecting good commercial management and further operational efficiencies across our businesses. Next to the performance of Europe Building Solutions on Slide 9, our smallest segment, representing less than 5% of group adjusted EBITDA and much more exposed to residential new build construction than the rest of our businesses. As you can see on the slide, a challenging quarter with activity levels impacted by adverse weather conditions and continued softness in the new build residential market. We continue to focus on disciplined commercial management and cost-saving actions to protect our profitability. And we expect the self-help initiatives that we put in place to leave us well positioned to benefit when market conditions improve. I'd also like to highlight that given recent portfolio activity this morning, we've announced that our Europe Materials Solutions and Europe Building Solutions segments will be combined into a new International Solutions segment, reflecting how the business is now managed. The change took effect in the fourth quarter and will be reflected in our Q4 and full year results.

Thanks, Randy. Hello, everyone. As you've heard from Albert earlier, we have had a strong third quarter, and this is reflected in our financial performance, as outlined on Slide 11. Let me briefly take you through the main drivers of our adjusted EBITDA performance moving from left to right on the slide. Starting with organic growth of $180 million, 8% ahead on a like-for-like basis, largely driven by further commercial progress and the continued benefits of our differentiated strategy. Acquisitions net of divestitures delivered a further $79 million of adjusted EBITDA, primarily reflecting the contribution from our acquisition of material assets in Texas and Australia as well as the impact of the divestiture of the European line operations. Overall, we delivered approximately $2.5 billion of adjusted EBITDA, 12% ahead of the prior year period. Moving now to Slide 12, where I will just take a moment to highlight some of the key components of our net debt movements and our strong and flexible balance sheet. Firstly, on the left-hand side, you can see we ended 2023 with a net debt position of $5.4 billion. Turning to our cash flow performance. We reported a net cash inflow of approximately $2.3 billion during the first nine months of the year. Acquisitions, net of divestitures and other items resulted in an outflow of $4 billion, while we also invested $1.6 billion in capital expenditure to support further growth in our existing business. In addition, we returned $2.5 billion in the form of dividends and share buybacks, demonstrating our commitment to returning cash to our shareholders. Taking all of this into account results in a net debt position of $11.2 billion at the end of September, representing a net debt to adjusted EBITDA ratio of approximately 1.7x on a trailing 12-month basis. Now at this stage, we would like to briefly update you on our recent capital allocation activities. As you can see here on Slide 14, we have completed a significant number of acquisitions in the year-to-date, investing approximately $4.6 billion on 35 acquisitions. The largest of these was our acquisition of material assets in Texas for $2.1 billion, further strengthening our position as the number one building materials business in the fastest-growing state in the U.S. I'm pleased to report that the integration is progressing well with some good early wins on our $65 million run rate synergy target. In July, we completed our acquisition of a majority stake in Adbri, a leading provider of building materials in Australia. This acquisition enhances our existing Australian businesses and creates a new platform to expand our solution strategy in this attractive market. Early integration is progressing well, and we have already identified significant opportunities to enhance the performance of the business, leveraging our scale, industry knowledge and technical expertise to improve long-term growth and operating performance. We have also invested approximately $1.7 billion on 33 strategic bolt-on acquisitions across Essential Materials, Road and Critical Utility Infrastructure, and Outdoor Living. All of this activity demonstrates our commitment to the disciplined allocation of capital into attractive high-growth markets and areas where we can further develop our integrated solutions strategy to create further growth and value for our shareholders. Turning now to our outlook for the remainder of the year on Slide 16. This morning, we are pleased to reaffirm the midpoint of our guidance for 2024, reflecting the positive momentum we see across our business as well as the impact of recent portfolio activity. Assuming normal seasonal weather patterns for the remainder of the year and no major dislocations in the macroeconomic environment, we expect the full year group EBITDA to be between $6.87 billion and $6.97 billion. Net income between $3.78 billion and $3.85 billion and earnings per share between $5.45 and $5.55 per share, representing another year of robust double-digit growth for CRH.

Now before we hand over to Q&A, on Slide 17, we would like to take a moment to share our thoughts on some of the trends we see across our markets as we look ahead to 2025. Today, the Americas represents approximately 75% of our adjusted EBITDA. With our new International division comprising our businesses in Europe and Australia, representing the remaining 25%. First to Infrastructure, which represents our largest exposure. Here, we expect demand in the United States to be underpinned by the continued rollout of the once-in-a-generation federal and state investment. And as Randy said earlier, less than 30% of the IIJA highway funds have been deployed so far, highlighting the significant runway that lies ahead. In our international markets, we expect robust demand in infrastructure activity to continue, supported by significant investment from public funding programs. In non-residential, we expect our key segments to continue to benefit from increased reindustrialization and onshoring activity. And in the residential segment, we expect new build activity in the U.S. and Europe to begin to improve gradually in the second half of the year, assuming interest rates continue to normalize. As we have said in the past, we believe the long-term fundamentals for residential construction remain very attractive in these markets, supported by favorable demographics and significant levels of underbuild. So in summary, the early trends are positive for our business, supported by robust demand in infrastructure and key non-residential segments with some signs of improving trends in new build residential construction. Regarding the pricing environment, we expect positive momentum to continue across our markets, supported by disciplined commercial management as well as the benefits of our integrated and value-focused solutions strategy. Overall, we are well positioned to capitalize on the strong growth opportunities that lie ahead. So that concludes our presentation this morning. And we are happy to take your questions. I will now hand you back to the moderator to coordinate the Q&A session of our call.

We'll take our first question from Anthony Pettinari of Citigroup. Your line is open.

Good morning. Can you talk a little bit more about kind of the key drivers of the performance in 3Q, maybe kind of relative to your expectations given the weather challenges that you saw?

Anthony, it's Albert here. I'll take that one. As you've seen by the announcement this morning, we've had a strong quarter, double-digit EBITDA growth despite, as you rightly point out, the adverse weather. And that really is building upon strong quarter one and quarter two for this year. I think really, it speaks to the fact that CRH is a different business, it's a differentiated solution strategy. At the core of that is that we do things differently from many others in our industry. We're a much more diverse business geographically, regionally here within the United States and across Europe as well. Crucially, our end use is much more diverse. We not only just focus on infrastructure, but we have a big exposure to non-residential and indeed, residential. With greater participation all across the value chain rather than just supplying one piece of that value chain. We incorporate engineering and design skills, technology, and innovation into the new products and services that we provide. So overall, we provide a more comprehensive, complete, put-in-place construction solution and because so much of our products rely on the design skills, the knowledge, the engineering, and indeed, the materials technology we have, it's a much more resilient model. And look, we're not immune to weather, but we're just less impacted by weather because of that solutions model. We're not immune to cycles, but we're less impacted by cycles. So no matter what the weather, no matter what the cycle, CRH always just seems to deliver. At the core of that is our solution strategy, which is much more consistent and much less volatile than others in this space. Now it's a very simple model, but it takes many years to master and understand how we incorporate design, engineering skills, knowledge, materials technology into the products that we sell to provide a more complete construction solution for our customers. It's one that's very difficult to replicate. But as you can see, again, this quarter is one that delivers considerable benefits to our shareholders.

Okay, that's very helpful. Could you provide some additional details on the reaffirmed guidance for '24 and what the key changes are compared to three months ago?

Anthony, Jim here. I'll take that. Yes, this morning, we're pleased to reaffirm the midpoint of our guidance, which is going to indicate and lead to another year of double-digit growth for CRH. We have good underlying momentum in the business, right, throughout quarter three. And indeed, the nine months, our adjusted EBITDA is up 12% for both periods. The guidance that we've given this morning, the midpoint is really showing a continuation of that positive momentum in Q4 with another quarter of double-digit growth in Q4. Since we last updated, maybe there's been a few moving parts, right? We've had significant additional acquisition spend, but most of that actually closed in early Q4. So we don't expect a significant contribution from those acquisitions to come through this year. Overall, actually, the net impact of M&A, net of our divestitures is in the region of about $150 million for the full year. We've also had a very good year in terms of land sales and surplus asset sales, and this was built into our guidance that we gave earlier in the year and it really reflects the new processes and professionalism and the approach that we implemented a number of years ago across the organization. But even excluding these surplus assets and land sales, we're still expecting to deliver another strong year of double-digit growth. In fact, it's our 11th consecutive year of margin expansion.

Your American Materials aggregate cement pricing was particularly high compared to what we're seeing from some peers in the quarter. Could you just talk more about what you expect from pricing on those products in the fourth quarter? And really, my question is more towards '25. What kind of increase would we see then?

This is Randy. I'll address that question. If you look at our volumes in Q3 and year-to-date, they've certainly been impacted by adverse weather; however, strong demand in key market segments like infrastructure, non-residential, and especially in the residential repair and maintenance sector has provided some support. We expect this momentum to continue as we complete the year. Therefore, we anticipate volumes will be flat to slightly down as we wrap up 2024, but this environment has supported good pricing momentum. As you mentioned, we achieved a 10% increase in aggregate pricing in Q3, and we expect that trend to continue for the remainder of the year, leading to double-digit pricing as we finish out the full year. Above all, our backlogs, which remain strong in both dollar margin and volume, provide a positive outlook moving into 2025. The backlogs are likely reflective of the Infrastructure Investment and Jobs Act funding, with less than 30% having been utilized so far. Therefore, there is significant potential for growth next year, and I would forecast low single-digit volume growth heading into 2025, along with ongoing positive momentum in pricing. We have strong demand and will also be addressing inflationary pressures as we approach 2025, so I expect pricing to increase by mid- to high single digits next year.

Hi. Thank you for taking my questions today. Just first tagging on from a question you've had earlier today, focusing into '25. Could you give a little more color on the outlook for your main end markets, residential, non-residential, and public construction? And in particular, if you focus on the public side, some of your key states, I know you said that there's a relatively small portion of IIJA has been spent. But maybe focusing on some of your key states in terms of what you're seeing in terms of the infrastructure build-out. Thank you.

Yes, Kathryn, this is Randy. From the U.S. perspective, as we've mentioned, this is a significant investment related to the Infrastructure Investment and Jobs Act. You're correct that less than 30% of the funding has been utilized so far. We indicated earlier this year that while this is a five-year bill, it may actually take around seven years to fully implement. This is largely due to the complexity and long-term nature of the projects involved, which are complemented by strong state activity that addresses major state-level challenges. This aligns well with our strengths in construction value processes. Additionally, we utilize engineering materials technology and design skills to engage early in these projects. Looking at our major states, we expect to be the largest beneficiary of IIJA funding over the bill's duration, which is reflected in our backlogs and volumes as well as our margins. We are pleased to see this strong environment persist. In the non-residential sector, we continue to experience strong demand in energy and water markets, bolstered by manufacturing and onshoring related to data centers and pharmaceuticals. While there has been some softness in the telecom sector, this is primarily due to timing and weather factors. Toward the end of Q3, we noticed an improvement in momentum in that area, which is encouraging. These projects tend to be quite complex and highly specialized, which showcases our solutions model of early engagement and tailored design and engineering capabilities. Overall, the outlook for 2025 is positive based on solid underlying fundamentals.

And just on Europe, Kathryn. Maybe just to give you some color. We're seeing robust infrastructure backdrop really underpinned by strong EU and local government funding programs, particularly in Central and Eastern Europe. Good activity on our high-spec manufacturing projects, seeing it in the areas of clean tech, in terms of power, and again, on data centers. And residential activities are stabilizing at low levels. We're seeing some early signs of improvement in Central and Eastern Europe. We're seeing Western Europe kind of troughing out and we expect a gradual recovery into 2025 on the back of a lower interest rate environment in Europe.

Perfect. To sum up, there's increasing complexity in terms of projects and logistics due to their size and scale. This presents challenges related to the complexity of the products involved. I have a follow-up question regarding the U.S. market and the availability of basic inputs. As a cement producer, the U.S. market is a net importer, and there are also shortages of fly ash and admixtures. Could you discuss that situation and how CRH fits into it, considering all the complexities you've mentioned earlier? Thank you.

Yes, Kathryn, Jim here. I'll take that. I think just in terms of the complexity of the projects, we're, again, I guess, what really comes true for us and where we really perform is due really to the nature of our solutions offering, right? We're not just delivering any one individual project. We're in earlier and longer on these projects. So we're able to help and partner with our end customers, right? And that certainly helps us on these particular complex projects. We got good visibility early of any potential bottlenecks, and we solve those problems together with our customers. Just going to the second part of it, maybe just in terms of supply challenges. You're right. The U.S. imports about 20% of its annual cementitious demand. We're very well positioned from that perspective. We've got excellent global supply lines into the U.S. So we're very well positioned to the extent that there are any tightness on those bottlenecks, and we're certainly not experiencing them in the current year.

Thanks. Hi all and thanks for taking my question. Can you discuss the scope impact into 2025 given the M&A activity? And can you also provide us with an update on the M&A pipeline looking forward?

Yes, we'll do, Ross. Yes, the scope impact for 2025 of the M&A activity. We've done about $4.6 billion of acquisitions this year, 35 acquisitions, two large ones being clearly around Hunter and Adelaide Brighton, 33 bolt-on deals. We expect the rollover contribution net of the divestments, primarily our Lime business, so the rollover impact into 2025 is going to be in the region of $250 million incremental adjusted EBITDA in 2025. As for the pipeline, right now, we're very strong and active pipeline of opportunities in front of us, and that's across all our platforms, across our materials, across our road, our utility infrastructure, and our outdoor living. We're operating in fragmented markets with multiple avenues for future growth and value creation, really again, thanks to the benefit of our integrated solutions strategy. That strategy is delivering strong results for the businesses, which are coming out of less cyclical, driving higher profits, cash, and returns. However, notwithstanding the runway that's ahead of us in terms of the pipeline, Ross, we're going to remain disciplined and efficient and really focus on driving and delivering further growth and profitability into '25 and beyond.

Thank you very much. Before I ask a question, I want to congratulate Albert on his retirement. Since his appointment, the shares have compounded at around 18% or 19%. Great job, and enjoy your retirement. Also, Jim, congratulations on your appointment. My first question is regarding the outlook for input costs. Could you provide some insights? You’ve shared some information about pricing, but can you elaborate on the direction of costs? Additionally, could you share your perspective on the relationship between price and cost, specifically whether we can expect a positive spread to continue? My second question is whether you've provided guidance on net debt for this year. Could you clarify where we might end up regarding net debt?

Sure, Gregor. Thank you for your comments. Yes, listen, from a cost perspective, we're still very much operating in an inflationary cost environment, and we're recovering from that period of very significant inflation we've incurred over the last number of years. And we've always said on the last number of calls that it will take some time to fully recover that cost inflation. For the full year 2024, firstly, on energy, energy costs are going to be moderately lower for us on a per unit cost basis in 2024. However, in other categories, we're continuously seeing inflation, particularly in the areas of labor, raw materials, subcontractor costs, and maintenance materials. Overall, we're looking at kind of mid-single-digit cost inflation increase, which highlights the importance of achieving the good pricing backdrop that we've achieved in 2024. Looking out to 2025, I think it's very early to call at this stage, but we still believe that we're going to see continued inflation across those same categories, across labor and raw materials, subcontractor costs heading into 2025. And it's against that backdrop again that we're looking for another good year of positive price momentum in 2025. The second question maybe on net debt to EBITDA, yes, we're expecting to exit the year 2024 around 1.6x net debt to EBITDA.

Good morning, everyone. I would like to congratulate Albert and Jim on their new roles. Regarding Building Solutions, ABS has been affected by weather conditions and a slowdown in new residential projects. However, now that the weather seems to have improved somewhat, especially through most of October, what are your observations in that area? How are you approaching this line as we look towards 2025, considering both end markets and margins? Any insights you can provide would be appreciated.

Yes, I'll take that. This is Randy. Regarding our Building Solutions business in the U.S., we see strong support from demand in the energy and water sectors, similar to what we experience in our Materials business. This is related to IIJA funding and the Inflation Reduction Act, which have fostered a robust demand environment. Our backlogs in this area are healthy, and we have a positive outlook. Over the next six to nine months, our focus will be on execution and any challenges we might face. However, the underlying demand remains strong at both federal and state levels, benefiting infrastructure projects and onshoring, reshoring, and mega projects we've mentioned previously.

And look, thanks, Jim. Look, as Jim said, we have run out of time today. I want to thank you for your questions. Just before we disconnect, I just want to leave you with some parting words. As many of you know, I'll be retiring at the end of this year, having had the great privilege of leading CRH for 11 years as Chief Executive. So this will be my last earnings call. Many of you have followed CRH for a long time, and I've very much enjoyed our interactions, our chats, and our challenges over the years. But I sincerely wish you all the best in your future endeavors. I have no doubt that in handing over to Jim, I'm leaving CRH in very capable hands. As I said earlier, I believe the business is very well positioned to capitalize on the future growth and value creation opportunities that lie ahead.

Thanks, Albert. And on behalf of myself and everybody in CRH, we'd like to thank you for your exceptional leadership and contribution to the business over the last 26 years. I thank everybody for dialing in this morning and for your attention, and I look forward to talking to you again in February when we will report out our fourth quarter and full-year results. Have a good day. Thank you.

Thank you. Your conference call has now ended. You may now disconnect.