La Confluence, Namur, Belgium built with Elevate RubberGardTM EPDM roofing membrane HALF-YEAR 2024 RESULTS RECORD PROFITABLE GROWTH MILJAN GUTOVIC – CEO | STEFFEN KINDLER – CFO JULY 26, 2024 01. HIGHLIGHTS AND KEY DEVELOPMENTS MILJAN GUTOVIC | CEO Wood Wharf, London, UK built with ECOPact with construction demolition materials inside 3 H1 2024 HIGHLIGHTS RECORD PROFITABLE GROWTH | --- | --- | |------------------------------------------------------------------------------------------------|------------------ ...

Company Overview - Holcim Ltd Unsponsored ADR (HCMLY) currently holds a Momentum Style Score of B, indicating a positive momentum outlook [2] - The company has a Zacks Rank of 2 (Buy), suggesting strong potential for outperformance in the market [3] Price Performance - Over the past week, HCMLY shares increased by 2.14%, while the Zacks Building Products - Miscellaneous industry rose by 2.72% [5] - In the last quarter, HCMLY shares have risen by 11.04%, and over the past year, they have increased by 52.37%, significantly outperforming the S&P 500, which rose by 5.04% and 33.96% respectively [6] Trading Volume - The average 20-day trading volume for HCMLY is 112,705 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, two earnings estimates for HCMLY have been revised upwards, increasing the consensus estimate from $1.30 to $1.34 [9] - For the next fiscal year, two estimates have also moved upwards with no downward revisions, indicating a positive earnings outlook [9]

Core Viewpoint - Cemex, S.A.B. de C.V. is experiencing improved investor sentiment due to recent divestitures and acquisitions, which are part of a broader portfolio rebalancing strategy aimed at driving sustainable growth [1][3]. Group 1: Recent Divestitures and Acquisitions - On September 10, Cemex announced the divestiture of its operations in Guatemala to Holcim Group for approximately $200 million, which includes a grinding mill with a capacity of nearly 0.6 million metric tons per year, three ready-mix plants, and five distribution centers [1]. - On September 4, Cemex decided to sell its remaining 34.8% interest in Neoris N.V. for approximately $209 million in cash, while maintaining a commercial relationship post-transaction [2]. - Cemex has announced the sale of more than $2 billion in assets as part of its portfolio rebalancing strategy, with plans to redeploy proceeds primarily in developed markets, especially the United States [3]. Group 2: Strategic Focus Areas - The company will prioritize the proceeds from divestments towards aggregates, urbanization solutions, and cement, with a strong emphasis on lower-carbon and circular economy initiatives [4]. - Cemex has acquired a majority stake in a recycling company, RC-Baustoffe Berlin GmbH & Co. KG, as part of its strategy to enhance its sustainability efforts [4]. - In collaboration with the Ellen MacArthur Foundation, Cemex aims to leverage the potential of the cement value chain in circularity [5]. Group 3: Industry Context and Performance - Despite a 12.9% decline in Cemex's stock over the past three months, the overall industry has also faced challenges, with a decline of 11.3% [7]. - The stock improved from a 25.5% decline year-to-date, while the industry experienced only a 0.7% decline [8]. - An increase in spending on infrastructure and public construction is expected to drive growth in the industry, alongside improvements in the single-family residential construction market [9].

Core Insights - Holcim AG has shown resilience in revenue developments, benefiting from falling electricity and freight costs, although concerns about cement supply over the next five years persist [1][6][8] - The company reported a 12.7% increase in recurring EBIT in local currency for H1 2024, driven by lower costs [5][6] - The overall market dynamics indicate a potential threat from increased cement production capacity in India and import dynamics from China, which could impact Holcim's market position [4][8] Financial Performance - The fully diluted earnings per share for Holcim AG were reported at 2.16 in H1 2024, reflecting a 1.6% growth in local currency [2] - EBIT performance for H1 2024 was recorded at 2,210 million CHF, up 8.1% compared to the previous year [5][6] - The cost of goods sold (COGS) has decreased significantly, contributing to the solid EBIT performance, with electricity and fuel costs accounting for 30-40% of COGS and freight around 20-30% [6][7] Market Dynamics - The company is focusing on value and cost efficiency amidst soft volume trends in most markets, except for Asia and the Middle East [4] - Significant capacity increases in India are expected to boost global cement production by 25% over the next six years, posing a competitive threat to Holcim [4][8] - The cyclicality and commodified nature of the cement business raise concerns about the durability of the current decrease in energy prices and potential supply chain disruptions [8] Competitive Landscape - Holcim's forward P/E ratio is around 13x, which is higher compared to competitors like Heidelberg Materials AG at above 8x, raising questions about its value proposition in the market [8] - The focus on reducing emissions and costs among producers in major markets like Europe and North America may limit growth opportunities for Holcim [8]

Core Viewpoint - Holcim Ltd Unsponsored ADR (HCMLY) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based solely on a company's changing earnings picture, with the Zacks Consensus Estimate tracking EPS estimates from sell-side analysts [2]. - The upgrade reflects an improvement in Holcim's earnings outlook, which could lead to increased buying pressure and a rise in stock price [4][6]. Impact of Earnings Estimates on Stock Prices - Changes in future earnings potential, as shown by earnings estimate revisions, are strongly correlated with near-term stock price movements, influenced by institutional investors [5]. - Rising earnings estimates and the subsequent rating upgrade suggest an improvement in Holcim's underlying business, encouraging investors to push the stock higher [6]. Importance of Earnings Estimate Revisions - Empirical research indicates a strong correlation between earnings estimate revisions and near-term stock movements, making tracking these revisions beneficial for investment decisions [7]. - The Zacks Rank system effectively utilizes earnings estimate revisions to classify stocks, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [8]. Specific Earnings Estimates for Holcim - For the fiscal year ending December 2024, Holcim is expected to earn $1.34 per share, reflecting a 10.7% increase from the previous year [9]. - Over the past three months, the Zacks Consensus Estimate for Holcim has increased by 2.3%, indicating a positive trend in earnings expectations [9]. Zacks Rating System Overview - The Zacks rating system maintains a balanced distribution of 'buy' and 'sell' ratings across its universe of over 4000 stocks, with only the top 5% receiving a 'Strong Buy' rating [10]. - Holcim's upgrade to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [11].

Core Viewpoint - Holcim Ltd Unsponsored ADR (HCMLY) is currently viewed as a better value opportunity compared to Armstrong World Industries (AWI) based on various financial metrics and rankings [1][7]. Valuation Metrics - HCMLY has a forward P/E ratio of 13.88, significantly lower than AWI's forward P/E of 22.43 [5]. - The PEG ratio for HCMLY is 1.89, while AWI's PEG ratio is slightly higher at 1.99, indicating a more favorable valuation for HCMLY when considering expected earnings growth [5]. - HCMLY's P/B ratio stands at 1.80, compared to AWI's much higher P/B of 8.65, further suggesting that HCMLY is undervalued relative to its book value [6]. Zacks Rank and Earnings Outlook - HCMLY holds a Zacks Rank of 1 (Strong Buy), indicating a positive earnings estimate revision trend, while AWI has a Zacks Rank of 3 (Hold) [3]. - The stronger estimate revision activity for HCMLY suggests an improving earnings outlook, making it more attractive for value investors [7]. Value Grades - HCMLY has been assigned a Value grade of B, whereas AWI has a Value grade of C, reflecting the relative attractiveness of their valuations [6].

Financial Data and Key Metrics Changes - The company achieved a record EBIT growth of 12.7% in local currency and 8.1% in Swiss francs, with net sales growth of 1.6% and a recurring EBIT margin of 23.2% [3][4][15] - Earnings per share increased by 10%, and the EBIT margin guidance for the full year was upgraded from 18% to above 18.5% [4][29] - The company reported a free cash flow of CHF 48 million, consistent with previous years, and a slight decrease in net debt to CHF 10.9 billion [25][26] Business Line Data and Key Metrics Changes - The Solutions & Products segment saw strong growth, particularly in roofing systems, with a significant increase in net sales and recurring EBIT [22][34] - The company completed 11 acquisitions and four divestments in H1, focusing on construction and demolition material recycling and expanding its footprint in aggregates and ready-mix [7][29] - The ECOPact low-carbon concrete accounted for 28% of total sales in ready-mix, while ECOPlanet low-carbon cement reached 26% of total cement sales [10] Market Data and Key Metrics Changes - North America experienced a margin expansion of 240 basis points to 19.4%, despite some short-term volume softness due to weather [18] - Latin America achieved a recurring EBIT of 35.6%, marking the 16th consecutive quarter of profitable growth [19] - Europe reported a recurring EBIT margin expansion of 240 basis points to over 16%, driven by acquisitions in aggregates and recycling solutions [20] Company Strategy and Development Direction - The company is focused on scaling up sustainable building solutions and investing in decarbonization and circularity as key growth drivers [6][8] - The M&A strategy targets attractive markets and segments, with a commitment to increasing construction and demolition material recycling to 10 million tonnes this year, a 20% increase from last year [29][39] - The company is progressing towards a U.S. listing planned for H1 next year [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued margin expansion and strong free cash flow generation above CHF 3 billion for H2 [29] - The company remains optimistic about the fundamentals in the construction market, despite some weather-related challenges [41][42] - Management emphasized the importance of sustainable building solutions and the potential for pricing power in selective markets [33][43] Other Important Information - The company reported a significant reduction in CO2 emissions per net sales by 7% and published its third climate report [8] - The share buyback program is on track, with CHF 516 million worth of shares repurchased so far [27] Q&A Session Summary Question: Can you talk about Solutions & Products and growth expectations? - Management noted that pricing is resilient and expects accelerated growth in roofing in the U.S. and Europe in H2 [34][35] Question: What are the revenue and margin opportunities for demolition materials? - Management confirmed that margins on recycled materials are currently higher than 15% and emphasized the profitability of upcycling [39][40] Question: Are you disappointed by underlying volume trends? - Management clarified that they are not losing market share and remain focused on sustainable building solutions [42] Question: What is the outlook for CapEx and U.S. sales? - Management indicated a slight increase in CapEx for growth projects and expressed confidence in recovering U.S. sales in H2 [50][52] Question: Can you provide insights on margin expansion drivers? - Management attributed margin expansion to pricing power, lower cost inflation pressures, and operational efficiency [55][58] Question: What is the outlook for residential demand in Europe? - Management acknowledged softer residential markets but highlighted strong infrastructure project pipelines [82]

Core Viewpoint - Holcim Ltd Unsponsored ADR (HCMLY) and Armstrong World Industries (AWI) both have a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and an improving earnings outlook for both companies [1] Valuation Metrics - HCMLY has a P/B ratio of 1.67, while AWI has a significantly higher P/B ratio of 8 [2] - The forward P/E ratio for HCMLY is 13.39, compared to AWI's forward P/E of 19.45. HCMLY also has a PEG ratio of 1.68, while AWI's PEG ratio is 1.73 [4] - Based on various valuation metrics, HCMLY holds a Value grade of B, whereas AWI has a Value grade of C [6] Investment Analysis - The Value category of the Style Scores system identifies undervalued companies using key metrics such as P/E ratio, P/S ratio, earnings yield, and cash flow per share [8] - Both HCMLY and AWI are recognized as strong stocks with solid earnings outlooks, but HCMLY is currently viewed as the superior value option based on valuation figures [9]

Investors with an interest in Building Products - Miscellaneous stocks have likely encountered both Holcim Ltd Unsponsored ADR (HCMLY) and James Hardie (JHX) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates an ...

Financial Data and Key Metrics Changes - The company reported over 3% growth in local currency for Q1 2024, with an EBIT growth of more than 17% in local currency and 7.8% in Swiss Francs, indicating strong margins and a positive outlook for the year [4][5][15] - The EBIT margin increased by 0.9 percentage points in Q1, supporting the guidance for an 18% EBIT margin for the full year [8][15] Business Line Data and Key Metrics Changes - Solutions & Products saw roofing sales increase by 67% in Q1, with a significant contribution from the acquisition of Duro-Last and organic growth of 38% [6][22] - The overall performance in Solutions & Products showed a profitable growth with margin expansion of 2 percentage points [22] Market Data and Key Metrics Changes - North America experienced strong underlying demand despite adverse weather and fewer trading days, with expectations for a strong performance in 2024 [19] - Latin America achieved record Q1 net sales and recurring EBIT with a strong margin of about 36%, driven by near-shoring trends and a robust pipeline of infrastructure projects [20] - Europe reported a record Q1 recurring EBIT margin expansion of almost 1.5 percentage points, marking the sixth consecutive quarter of margin expansion [20] Company Strategy and Development Direction - The company continues to focus on M&A as a growth driver, having completed five acquisitions in Q1 2024 and a total of 28 in 2023, while also closing four divestments [7][26] - Sustainability initiatives are emphasized, with low-carbon solutions like ECOPact and ECOPlanet increasing from 16% to 26% of respective sales [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving over 4% organic net sales growth and an additional 2% from M&A for 2024, with a target of over CHF 3 billion in free cash flow [27] - The company is optimistic about the recovery in roofing and solutions, expecting continued strong demand and growth in the coming months [55] Other Important Information - The company has returned over CHF 11 billion to shareholders since 2018 and plans to increase dividends by 12% to CHF 2.8 [24] - The company is committed to maintaining a strong investment-grade rating while executing share buybacks from cash on the balance sheet [24] Q&A Session Summary Question: Can you quantify the price cost benefit in Q1 and its evolution through 2024? - Management indicated that energy costs are down mid to high single digits, contributing positively to margins, and expects continued normalization in other cost items [31] Question: What is the M&A pipeline looking like? - The company has a healthy pipeline with a focus on bolt-on acquisitions, expecting many more transactions to come [30] Question: Can you provide insights on pricing and volume developments? - Management noted that margin development is now more focused on value-added systems rather than volume, with expectations for continued pricing improvement throughout the year [33][34] Question: How did Asia and Africa perform in Q1? - Asia faced challenges, particularly in China, but overall performance in Africa and the Middle East was strong, with sustainable growth expected [51] Question: What is the outlook for the European construction cycle? - Management expects a good second half of the year driven by infrastructure projects, despite a softer first half mainly in the residential sector [61]