CRH plc (CRH) Earnings

Management highlights

- **Q2 2026 Financial Performance**: Management reported a record second quarter with growth in revenue, adjusted EBITDA, margin, and diluted EPS compared to Q2 2025. Results reflected favorable underlying demand, disciplined commercial execution, and contributions from recent acquisitions, and underpinned by the company's long-term strategy. - **Capital Allocation & Portfolio Management**: - Year-to-date (YTD), the company completed three strategic non-core divestitures for total proceeds of $1.9 billion, and invested $1.4 billion across 17 value-accretive acquisitions aligned with its four strategic growth platforms (aggregates, cementitious, roads, water). The largest completed acquisition was Axios Water for ~$700 million, strengthening its position as a leading US water infrastructure player. - The company announced a binding agreement to acquire Arcosa, a leading US provider of building materials and critical infrastructure products, for a total enterprise value of $8.5 billion. The acquisition will reinforce CRH's position as the leading aggregates and critical infrastructure player in North America, adding 35 million tons of annual high-quality aggregates production and expanding the company's footprint into high-growth Dallas and Phoenix markets. Management expects $175 million in annual run-rate cost synergies by year three post-close, with $60 million achieved in the first full year of ownership. The transaction is expected to close in Q1 2027, pending regulatory and shareholder approval. - YTD, the company invested $800 million in growth capex to expand capacity in high-growth markets, improve efficiency, increase automation, and optimize energy use. It returned $1.2 billion to shareholders via dividends and share buybacks YTD; the board declared a 5% YoY increase in the quarterly dividend to 39 cents per share. The share buyback program is paused after completion of the latest tranche pending closing of the Arcosa acquisition, and will be re-evaluated at a later date. - **Long-Term Strategic Positioning**: - CRH is focused on increasing exposure to three large, growing infrastructure megatrends: transportation, water, and reindustrialization, while strengthening its four connected growth platforms. The company has a proven track record of acquiring and integrating businesses at scale, having completed over 1,200 acquisitions in its history, with an average 600 basis points of margin improvement within three years post-acquisition since 2018. - Over the next five years, management expects ~$40 billion in total financial capacity, with 70% allocated to growth investments and 30% returned to shareholders. The Arcosa acquisition accelerates progress toward the company's 2030 financial targets: 7-9% annual revenue growth, 22-24% adjusted EBITDA margin, and average adjusted free cash flow conversion over 100%. Post-Arcosa, CRH's forecast 2026 combined adjusted EBITDA will be larger than the next four US peers combined, giving the company scale-driven commercial, operational, and strategic advantages.

Guidance

- Management reaffirms its full-year 2026 adjusted EBITDA guidance range of $8.1 billion to $8.5 billion, representing another year of growth and margin expansion, assuming normal seasonal weather for the remainder of the year and no major new geopolitical or macroeconomic dislocations. - Reaffirmed full-year 2026 net income guidance of $3.9 billion to $4.1 billion, and diluted EPS guidance of $5.60 to $6.05. - Net incremental EBITDA contribution from 2026 YTD acquisitions and divestitures is expected to be ~$200 million for the full year, with negligible FX impact based on current exchange rates. - For 2026, management expects low single-digit volume growth and mid-single-digit pricing growth for the international business, which will mark the ninth consecutive year of positive pricing for the segment. - Management expects another year of margin progression for the US asphalt business in 2026, and the 13th consecutive year of full-year margin expansion for CRH overall.

Segment performance

1. **America's Materials Solutions**: Delivered a strong Q2 2026, with total revenues up 10% and adjusted EBITDA up 12% year-over-year (YoY). Within the segment, Essential Materials revenues grew 20% YoY; aggregates volume increased 2% with pricing up 5%, while cement volumes fell 2% YoY due to adverse weather and cement pricing declined 1% YoY. Road solutions revenues grew 6% YoY, supported by higher asphalt volumes, higher pricing, and increased paving activity from strong project execution. The segment delivered 40 basis points of YoY margin expansion, and contributed 43% of total Q2 revenue. 2. **America's Building Solutions**: Q2 performance was impacted by completed non-core divestitures and a subdued new build residential market, plus elevated inflationary haulage costs. Total revenues were 2% lower YoY, and adjusted EBITDA was 8% lower YoY. Outdoor living residential repair and remodel demand remained resilient, while the building and infrastructure solutions sub-segment saw good growth in data center, water, and energy markets. The segment contributed 31% of total Q2 revenue. 3. **International Solutions**: Delivered continued growth and margin expansion, supported by higher activity levels, positive pricing momentum, and strict cost control. Total revenue grew 5% YoY, which translated to an 8% increase in adjusted EBITDA and 70 basis points of YoY margin expansion. Europe benefited from favorable infrastructure and reindustrialization activity, while Australia performed well on strong underlying demand, operational improvements, and synergy delivery from recent acquisitions. The segment contributed 26% of total Q2 revenue. Overall, CRH's Q2 2026 total revenue was $10.8 billion, up 6% YoY; adjusted EBITDA was over $2.6 billion, up 7% YoY; diluted EPS grew 14% YoY, and overall adjusted EBITDA margin expanded 30 basis points YoY.

Risks & headwinds

- Current macroeconomic and geopolitical volatility and uncertainty create uncertainty around future operating results. - Adverse weather conditions can negatively impact construction activity levels and volumes in key operating regions, as seen in Q2 2026 in southern and southeastern US markets. - Persistent cost inflation, particularly in haulage rates for America's Building Solutions and liquid asphalt, creates margin pressure that can take time to fully offset with price increases. - The Arcosa acquisition is subject to regulatory approvals and Arcosa shareholder approval, and there is risk the transaction will not close on the expected timeline or at all. - A prolonged downturn in US new build residential construction continues to pressure volumes for ready-mix concrete and cement, and a recovery is not expected before the back half of 2027 at the earliest. - A potential continuing resolution for US federal infrastructure funding could create a short-term funding gap, though management does not expect material disruption to its business.

Analyst Q&A

• Q: The company maintained 2026 guidance despite ongoing macro volatility; what underlying factors support this confidence, and what are the core assumptions behind guidance? /

  A: Management notes that despite weather disruption in Q2 2026 and ongoing macro uncertainty, underlying demand is strong across key end markets. 40% of IIJA infrastructure funding remains unspent this year, with strong momentum carrying into 2027. Reindustrialization activity (data centers, advanced manufacturing, energy projects) has picked up notably in 2026, while US new build residential is subdued but repair and remodel demand is resilient. Internationally, infrastructure demand is strong, reindustrialization activity is growing in Central/Eastern Europe, and pockets of residential recovery are seen in Western Europe. Backlog and bidding volumes are up YoY, with pricing on track to hit full-year expectations, and net acquisition activity is expected to add ~$200 million in incremental EBITDA with negligible FX impact, giving management confidence in the reaffirmed guidance range. ---

• Q: What is the outlook for the proposed Build America 250 infrastructure authorization, and what impact could a short-term continuing resolution have on CRH's business? /

  A: Management notes infrastructure investment remains broadly bipartisan, with the House proposal authorizing $580 billion for highway, transit, and safety programs, including increased core infrastructure funding, permitting reform to accelerate project delivery, and a new revenue stream for the Highway Trust Fund. While the Senate is still developing its version, the overall policy environment remains supportive. If a continuing resolution creates a short-term funding gap, states typically reallocate funding to increase repair and maintenance work, which benefits CRH as the largest US paving provider, and management expects no material disruptions to business in 2026 or 2027. ---

• Q: What is the current state of the M&A pipeline and divestiture strategy, and what is the update on Arcosa approval timing? /

  A: Management reports a strong, active pipeline of opportunities aligned with the company's connected growth platform and infrastructure megatrends, with a robust balance sheet providing substantial capital optionality. The Arcosa transaction is on track, expected to close in Q1 2027 pending regulatory and shareholder approval, and adds high-quality aggregates reserves and expands CRH's footprint in fast-growing, previously underpenetrated markets. The company will continue to actively divest non-core assets to recycle capital into higher-growth, more strategically aligned parts of the portfolio, as it has done YTD with $1.9 billion in completed divestitures, and this active portfolio management is an ongoing process rather than a one-time event. ---

• Q: Can you provide an update on CRH's exposure and outlook for data center projects, which are a key part of the reindustrialization trend? /

  A: Management notes activity in data center and reindustrialization projects has stepped up notably in 2026, in what it sees as the early phase of a generational multi-year capital investment wave in the US. CRH is currently working on 200 multi-year data center projects across the US, with CRH facilities located within 25 miles of 85% of all announced US data centers. The company's connected portfolio allows it to capture a large share of wallet on these large projects, supplying everything from early site stabilization and underground water/energy infrastructure to aggregates, concrete, and final paving. These large multi-year projects are a meaningful long-term driver of growth for the company.