CRH Q1 2024 Results

DUBLIN–(BUSINESS WIRE)–CRH plc (NYSE:CRH) (LSE:CRH):

Albert Manifold, Chief Executive, said:

“We are pleased to report a good first quarter performance in what is the seasonally least significant period for our business. That performance was supported by positive pricing momentum, early-season project activity, favorable weather in certain regions and the contribution from acquisitions. We believe the strength of our balance sheet together with our relentless focus on the efficient allocation of our capital enables us to capitalize on the opportunities we see for further growth and value creation in 2024 and beyond. Given this backdrop, we are pleased to reaffirm our previous guidance for 2024.”

Announced Friday, May 10, 2024

Q1 2024 Results

Performance Overview

CRH delivered a solid start to the year as early-season project activity and favorable weather in certain regions of North America were further supported by pricing progress and contributions from acquisitions offsetting lower volumes in Europe in the seasonally least significant quarter for the Company. Total revenues of $6.5 billion (Q1 2023: $6.4 billion) were 2% ahead of the prior year while organic revenues* were 1% ahead. Net income of $114 million (Q1 2023 net loss: $31 million) was ahead of the prior year reflecting good operating performance and a gain on the completion of phases one and two of the European Lime divestiture. Adjusted EBITDA* of $445 million (Q1 2023: $386 million) was 15% ahead as a result of the continued delivery of our integrated solutions strategy, strong commercial progress, ongoing cost control and further operational efficiencies. Organic Adjusted EBITDA* was 12% ahead of Q1 2023. CRH’s net income margin of 1.7% (Q1 2023 net loss margin: 0.5%) and Adjusted EBITDA margin* of 6.8% (Q1 2023: 6.0%) were both ahead of the comparable prior year period.

• Americas Materials Solutions’ total revenues were 16% ahead of Q1 2023, as early-season project activity and favorable weather in key markets supported activity along with price increases across all lines of business and good contributions from acquisitions. Adjusted EBITDA was well ahead in this seasonally small quarter, as pricing progress and operational efficiencies offset the impact of higher input costs.
• Americas Building Solutions delivered a positive performance with total revenues 2% ahead of Q1 2023, led by price improvements as well as contributions from acquisitions. Adjusted EBITDA was 2% ahead supported by pricing progress and operational efficiencies along with good performances from recent acquisitions.
• Europe Materials Solutions’ total revenues were 8% behind Q1 2023 as positive price momentum was offset by lower activity levels due to unfavorable winter weather and the divestiture of the Lime operations. Adjusted EBITDA was 32% ahead, driven by good commercial management and lower energy costs along with a continued focus on cost management and operational efficiencies.
• Europe Building Solutions’ total revenues were 10% behind Q1 2023, as favorable pricing was offset by subdued demand in new-build residential markets as well as adverse winter weather conditions. Adjusted EBITDA was 38% behind as a result of lower activity levels, partially offset by cost saving actions.

CRH’s earnings per share was higher than Q1 2023 at $0.16 (Q1 2023 loss per share: $0.05).

Acquisitions and Divestitures

In the first three months of 2024, CRH completed eight acquisitions for a total consideration of $2.2 billion, compared with $0.2 billion in the first quarter of 2023. The largest acquisition in Q1 2024 was in Americas Materials Solutions where the Company completed the acquisition of a portfolio of cement and readymixed concrete assets and operations in Texas for a total consideration of $2.1 billion. The integration of the business is well underway and we expect to realize run-rate synergies of $60 million by year three. In addition, Americas Materials Solutions completed a further two acquisitions, Americas Building Solutions completed three acquisitions and Europe Materials Solutions completed two acquisitions. On April 5, 2024, the Company also acquired a materials solutions business, including two hard rock quarries, in California. The acquisition represents an attractive entry point into California for Americas Materials Solutions, particularly due to its long-lived hard rock reserves and vertically integrated asphalt and readymixed concrete operations.

With respect to divestitures, CRH realized proceeds from divestitures and disposals of long-lived assets of $0.7 billion, primarily related to the divestiture of its European Lime operations. The Lime transaction was structured in three phases with two phases of the divestiture, comprising CRH’s Lime operations in Germany, Czech Republic, Ireland and the United Kingdom now complete. The remaining phase, consisting of operations in Poland, is expected to complete in the second half of 2024. In December 2023, the Company entered into a sales agreement to dispose of certain of its cement and materials assets in Canada, which closed on April 1, 2024.

In February 2024, CRH entered into a binding agreement to acquire a majority stake in Adbri Ltd (Adbri), a materials business in Australia. The proposed transaction will result in CRH acquiring approximately 53% of the issued share capital for $0.7 billion, increasing CRH’s total shareholding to approximately 57%. Adbri has high-quality assets and leading market positions in Australia that complement CRH’s core competencies in cement, concrete and aggregates while creating additional opportunities for growth and development for our existing Australian business. The proposed transaction is subject to customary terms and conditions and is expected to complete in 2024.

Capital Allocation

As previously announced, CRH has transitioned to quarterly dividend payments. In line with the Company’s policy of consistent long-term dividend growth, the Board has declared a new quarterly dividend of $0.35 per share, representing an annualized increase of 5% on the prior year. The dividend will be paid wholly in cash on June 26, 2024, to shareholders registered at the close of business on May 24, 2024. The ex-dividend date will be May 23, 2024.

As part of its ongoing share buyback program, CRH repurchased approximately five million ordinary shares in Q1 2024 for a total consideration of $0.4 billion. On May 9, 2024, the latest tranche of the share buyback program was completed, bringing the year-to-date cash returned to shareholders to $0.6 billion. We are pleased to announce that we are commencing an additional $0.3 billion tranche to be completed no later than August 7, 2024. We will continue to assess our share buyback program for the remainder of 2024 with further updates on a quarterly basis.

Innovation and Sustainability

We believe the transition to a more sustainable built environment represents a significant commercial opportunity for CRH. We continue to accelerate investment in innovation to deliver on our sustainable solutions strategy and address three global challenges of water, circularity and decarbonization. By continuing to meet the changing needs of our customers and society, we aim to drive further growth and value creation.

2024 Full Year Outlook

Notwithstanding the positive start to the year, it is still early in the construction season and we are pleased to reaffirm our previous guidance for 2024. Overall, we expect a favorable market backdrop and continued positive pricing momentum in 2024. Our operations in North America are expected to benefit from significant infrastructure activity in our markets and increased investment in key non-residential segments, while in Europe, we expect good underlying demand in infrastructure and key non-residential markets, further supported by disciplined cost control. Residential construction, particularly new-build activity, is expected to remain subdued across our markets in the near-term. Assuming normal seasonal weather patterns and no major dislocations in the macroeconomic environment, CRH remains well positioned for another year of growth in 2024.

Americas Materials Solutions

Americas Materials Solutions’ total revenues were 16% ahead of the first quarter of 2023 in a seasonally small quarter, driven primarily by price increases, higher volumes across all lines of business and a positive contribution from acquisitions, including the acquisition of cement and readymixed concrete assets in Texas which closed in early February 2024. Organic total revenues* were 13% ahead.

In Essential Materials, total revenues increased by 12%. This reflects an 8% increase in aggregates pricing which was adversely impacted by geographic mix and a 9% increase in cement pricing. Aggregates volumes increased by 8% and cement volumes increased by 6%, due to favorable weather in the West and Great Lakes regions which enabled early commencement of projects, together with the positive impact from acquisitions.

In Road Solutions, total revenues increased by 19% driven by higher pricing and increased activity levels through continued funding support relating to the Infrastructure Investment and Jobs Act. Asphalt prices increased by 5% while volumes were 11% ahead of the comparable period in 2023 due to favorable weather in key regions and early-season project activity. Paving and construction revenues for the first quarter of 2024 increased by 20%. Readymixed concrete pricing was 8% higher than the first quarter of 2023, while volumes were 9% ahead. We have seen continued positive momentum in bidding activity, with construction backlogs ahead of the prior year comparable period.

First quarter 2024 Adjusted EBITDA for Americas Materials Solutions of $15 million was ahead of the first quarter of 2023 as increased pricing and operational efficiencies mitigated the impact of higher labor, subcontractor and raw materials costs. Organic Adjusted EBITDA* was ahead of the first quarter of 2023. Adjusted EBITDA margin increased by 250bps.

Americas Building Solutions

Americas Building Solutions recorded total revenues growth of 2%, driven by positive acquisition performance and increased pricing. Organic total revenues* were in line with the first quarter of 2023.

In Building & Infrastructure Solutions, total revenues declined by 4% due to unfavorable weather in certain markets as well as the impact of subdued residential demand which negatively impacted activity levels. The non-residential and infrastructure construction backdrop remains supported through increased funding for critical water, energy and telecommunications infrastructure.

In Outdoor Living Solutions, total revenues increased by 5%, with growth across most regions, driven by strong sales into the retail channel, particularly in lawn and garden products, along with increased demand in the professional business channel.

First quarter 2024 Adjusted EBITDA for Americas Building Solutions was 2% ahead of the comparable period in 2023, 1% ahead on an organic* basis, driven by higher pricing and cost containment initiatives which offset the impact of lower volumes and cost inflation, particularly in labor. As a result, Adjusted EBITDA margin was 10bps ahead of the first quarter of 2023.

Europe Materials Solutions

Total revenues in Europe Materials Solutions declined by 8%, or 5% on an organic* basis, driven by lower volumes across Western Europe, partly offset by volume growth in Central and Eastern Europe and continued pricing progress.

In Essential Materials, total revenues were 10% behind the comparable period in 2023 due to the completed divestiture of phases one and two of our European Lime operations and lower volumes. Aggregates pricing was 3% ahead and overall cement pricing, which was adversely impacted by geographic mix, was in line with the first quarter of 2023, or 2% ahead excluding the Philippines. Aggregates volumes declined by 6% while cement volumes were 2% behind due to lower activity levels, particularly in Western Europe which was impacted by unfavorable weather in several key markets. This was partly offset by volume growth in Central and Eastern Europe.

In Road Solutions, pricing progress was offset by reduced volumes due to adverse weather which resulted in total revenues being 5% behind the 2023 comparable period. Asphalt pricing increased by 1%, while volumes declined by 9%. Paving and construction revenues decreased by 3%. Readymixed concrete pricing was in line with the first quarter of 2023, while volumes decreased by 13%.

Adjusted EBITDA in Europe Materials Solutions was $90 million, 32% ahead of the comparable period in 2023, and 59% ahead on an organic* basis, primarily driven by increased pricing, lower energy costs and operational efficiencies. Adjusted EBITDA margin increased by 140bps compared with the first quarter of 2023.

Europe Building Solutions

Total revenues in Europe Building Solutions declined by 10%, or 12% on an organic* basis, versus the first quarter of 2023, with subdued new-build residential activity continuing in the first quarter of 2024.

Within Building & Infrastructure Solutions, total revenues declined by 12% compared with the first quarter of 2023. Infrastructure Products revenues increased, benefiting from acquisitions offsetting lower activity levels and project delays in key markets. Revenues in Precast and Construction Accessories were negatively impacted by adverse weather conditions and muted new-build residential activity in several markets.

Revenues in Outdoor Living Solutions were 2% ahead of the comparable period in 2023 through pricing increases, however volumes were impacted by prolonged winter weather in certain key markets.

Adjusted EBITDA in Europe Building Solutions declined by 38% versus the comparable prior year period, a 40% decrease on an organic* basis. Organic volume declines were partially offset by disciplined commercial management, cost saving initiatives and lower raw materials costs. Adjusted EBITDA margin decreased by 240bps compared with the first quarter of 2023.

Other Financial Items

Depreciation, depletion and amortization charges of $0.4 billion were in line with the first quarter of the prior year (Q1 2023: $0.4 billion).

Interest income of $43 million (Q1 2023: $40 million) was in line with Q1 2023. Interest expense of $133 million (Q1 2023: $81 million) was higher than the comparable period in 2023, primarily due to an increase in gross debt balances and higher interest rates on new debt issued.

Other nonoperating income, net was $161 million (Q1 2023: $nil) primarily related to the gain on the divestiture of phases one and two of the Company’s European Lime operations and unrealized gains on certain investments.

Earnings per share was higher than Q1 2023 at $0.16 (Q1 2023 loss per share: $0.05) due to a positive operating performance and the gain on the divestiture of the Lime operations.

Balance Sheet and Liquidity

Total short and long-term debt was $12.7 billion at March 31, 2024, compared with $11.6 billion at year-end 2023 and $9.8 billion at March 31, 2023. In the three months ended March 31, 2024, $1.8 billion of commercial paper was issued across the U.S. Dollar and Euro Commercial Paper Programs. In January 2024, €600 million of euro-denominated notes were repaid on maturity. Net Debt* at March 31, 2024, was $9.6 billion, compared with $5.4 billion at December 31, 2023, and $5.3 billion at March 31, 2023. The increase in Net Debt* compared with December 31, 2023, reflects outflows from operating activities, the significant acquisition of a portfolio of cement and readymixed concrete assets and operations in Texas, cash returns to shareholders through dividends and continued share buybacks, and the purchase of property, plant and equipment, partially offset by proceeds from the completed divestiture of phases one and two of the European Lime operations.

CRH ended Q1 2024 with $3.3 billion of cash and cash equivalents on hand (Q1 2023: $4.7 billion) and $3.8 billion of undrawn committed facilities. During April 2024, the Company completed a one-year extension option on the undrawn committed facilities extending the maturity date to May 2029. At the end of Q1 2024, CRH had sufficient cash balances to meet all maturing debt obligations for the next 1.3 years and the weighted average maturity of the remaining term debt was 7.8 years. As at March 31, 2024, the Company had a $2.0 billion U.S. Dollar Commercial Paper Program and a €1.5 billion Euro Commercial Paper Program. In April 2024, the Company increased the size of its existing U.S. Dollar Commercial Paper Program to $4.0 billion, providing added flexibility to support the Company’s short-term liquidity needs. As at March 31, 2024 there was $1.9 billion of outstanding issued notes on the U.S. Dollar Commercial Paper Program and $0.9 billion of outstanding issued notes on the Euro Commercial Paper Program. CRH remains committed to maintaining its robust balance sheet and expects to maintain a strong investment-grade credit rating with a BBB+ or equivalent rating with each of the three main rating agencies.

Q1 2024 Conference Call

CRH will host an analysts’ conference call and webcast presentation at 8:00 a.m. (New York)/1:00 p.m. (Dublin) on Friday, May 10, 2024, to discuss the Q1 2024 results and 2024 outlook. Registration details are available on www.crh.com/investors. Upon registration a link to join the call and dial-in details will be made available. The accompanying investor presentation will be available on the investor section of the CRH website in advance of the conference call, while a recording of the conference call will be made available afterwards.

Dividend Timetable

The timetable for payment of the quarterly dividend of $0.35 per share is as follows:

The default payment currency is U.S. Dollar for shareholders who hold their Ordinary Shares through a Depository Trust Company (DTC) participant. It is also U.S. Dollar for shareholders holding their Ordinary Shares in registered form, unless a currency election has been registered with CRH’s Transfer Agent, Computershare Trust Company N.A. by 5:00 p.m. (New York)/10:00 p.m. (Dublin) on May 23, 2024.

The default payment currency for shareholders holding their Ordinary Shares in the form of Depository Interests is euro. Such shareholders can elect to receive the dividend in U.S. Dollar or Pounds Sterling by providing their instructions to the Company’s Depositary Interest provider, Computershare Investor Services plc, by 12:00 p.m. (New York)/5:00 p.m. (Dublin) on May 28, 2024.

Appendices

Appendix 1 – Primary Statements

The following financial statements are an extract of the Company’s Consolidated Financial Statements prepared in accordance with U.S. GAAP for the period ended March 31, 2024, and do not present all necessary information for a complete understanding of the Company’s financial condition as of March 31, 2024. The full Consolidated Financial Statements prepared in accordance with U.S. GAAP for the period ended March 31, 2024, including notes thereto, will be included as a part of the Company’s Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission (SEC).

Condensed Consolidated Statements of Income (Unaudited)

(in $ millions, except share and per share data)

Condensed Consolidated Balance Sheets (Unaudited)

(in $ millions, except share data)

Contacts

Contact CRH at +353 1 404 1000
Albert Manifold, Chief Executive

Jim Mintern, Chief Financial Officer

Frank Heisterkamp, Director of Capital Markets & ESG

Tom Holmes, Head of Investor Relations

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