CRH(CRH) - 2024 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for CRH plc, including statements of income, comprehensive income, balance sheets, cash flows, and changes in equity, along with detailed notes on significant accounting policies, revenue disaggregation, acquisitions, divestitures, debt, and segment information. It provides a foundational financial overview for the periods ended September 30, 2024, and September 30, 2023 Condensed Consolidated Statements of Income (Unaudited) This statement details CRH plc's revenues, gross profit, operating income, and net income for the three and nine months ended September 30, 2024 and 2023 | Metric (in $ millions) | Three months ended Sep 30, 2024 | Three months ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | |:-----------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Total revenues | 10,515 | 10,128 | 26,702 | 26,264 | | Gross profit | 4,059 | 3,763 | 9,541 | 9,012 | | Operating income | 1,964 | 1,788 | 3,821 | 3,403 | | Net income | 1,389 | 1,318 | 2,812 | 2,499 | | Net income attributable to CRH plc | 1,376 | 1,306 | 2,789 | 2,477 | | Basic EPS | $1.99 | $1.81 | $4.03 | $3.36 | | Diluted EPS | $1.97 | $1.80 | $4.00 | $3.34 | Condensed Consolidated Statements of Comprehensive Income (Unaudited) This statement presents CRH plc's net income and other comprehensive income components, leading to total comprehensive income for the specified periods | Metric (in $ millions) | Three months ended Sep 30, 2024 | Three months ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | |:-----------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Net income | 1,389 | 1,318 | 2,812 | 2,499 | | Other comprehensive income (loss) | 348 | (151) | 132 | 17 | | Comprehensive income | 1,737 | 1,167 | 2,944 | 2,516 | | Comprehensive income attributable to CRH plc | 1,690 | 1,168 | 2,906 | 2,501 | Condensed Consolidated Balance Sheets (Unaudited) This statement provides a snapshot of CRH plc's assets, liabilities, and equity at September 30, 2024, December 31, 2023, and September 30, 2023 | Metric (in $ millions) | Sep 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | |:-----------------------|:-------------|:-------------|:-------------| | Total current assets | 14,840 | 16,885 | 16,315 | | Total assets | 51,221 | 47,469 | 47,631 | | Total current liabilities | 10,668 | 10,013 | 9,191 | | Total liabilities | 28,055 | 25,848 | 24,983 | | Total equity | 22,805 | 21,288 | 22,328 | Condensed Consolidated Statements of Cash Flows (Unaudited) This statement outlines CRH plc's cash flows from operating, investing, and financing activities for the nine months ended September 30, 2024 and 2023 | Metric (in $ millions) | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | |:-----------------------|:-------------------------------|:-------------------------------| | Net cash provided by operating activities | 2,259 | 2,594 | | Net cash used in investing activities | (4,405) | (1,729) | | Net cash used in financing activities | (1,144) | (1,097) | | Decrease in cash and cash equivalents, including restricted cash | (3,310) | (214) | | Cash and cash equivalents and restricted cash at end of period | 3,080 | 5,722 | Condensed Consolidated Statements of Changes in Equity (Unaudited) This statement details the changes in CRH plc's total equity, including net income, other comprehensive income, share repurchases, and dividends, for the nine months ended September 30, 2024 | Metric (in $ millions) | Balance at Dec 31, 2023 | Net income | Other comprehensive income | Share-based compensation | Repurchases and retirement of common stock | Dividends declared on common stock | Noncontrolling interests arising on acquisition | Adjustment of redeemable noncontrolling interests to redemption value | Balance at Sep 30, 2024 | |:-----------------------|:------------------------|:-----------|:---------------------------|:-------------------------|:-------------------------------------------|:-----------------------------------|:------------------------------------------------|:----------------------------------------------------------------------|:------------------------| | Total Shareholders' Equity Attributable to CRH plc Shareholders | 20,854 | 2,789 | 117 | 96 | (1,045) | (719) | – | (30) | 21,875 | | Noncontrolling Interests | 434 | 2 | 15 | – | – | – | 507 | – | 930 | | Total Equity | 21,288 | 2,791 | 132 | 96 | (1,045) | (719) | 507 | (30) | 22,805 | - For the nine months ended September 30, 2024, dividends declared on common stock were $1.05 per common share[18] Notes to Condensed Consolidated Financial Statements (Unaudited) This section provides detailed explanatory notes supporting the unaudited condensed consolidated financial statements, covering accounting policies, revenue, acquisitions, debt, and segment information 1. Summary of significant accounting policies This section outlines the significant accounting policies applied in preparing the financial statements - CRH plc operates in the building materials industry, providing products and services for construction projects primarily in North America and Europe, and is a major producer of aggregates, cement, readymixed concrete, asphalt, paving and construction services, and value-added building products[22] - The unaudited Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP for interim financial information and reflect all normal recurring adjustments, with operating results for the three and nine months ended September 30, 2024, not necessarily indicative of the full year[23] - Restricted cash consists of amounts held in escrow for like-kind exchange replacement assets under Section 1031 of the U.S. Internal Revenue Code[24] - There were no material impacts from the adoption of new accounting standards for the nine months ended September 30, 2024[25] 2. Revenue This section details CRH's revenue disaggregation by operating segments and principal activities, along with contract assets and liabilities - CRH disaggregates revenue by four operating and reportable segments: Americas Materials Solutions, Americas Building Solutions, Europe Materials Solutions, and Europe Building Solutions, and also by principal activities and products: Essential Materials, Road Solutions, Building & Infrastructure Solutions, and Outdoor Living Solutions[25] | Principal activities and products (in $ millions) | Three months ended Sep 30, 2024 | Three months ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | |:----------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Essential Materials | 2,753 | 2,612 | 7,165 | 7,152 | | Road Solutions | 5,341 | 5,085 | 11,954 | 11,396 | | Building & Infrastructure Solutions | 1,193 | 1,207 | 3,442 | 3,614 | | Outdoor Living Solutions | 1,228 | 1,224 | 4,141 | 4,102 | | Total revenues | 10,515 | 10,128 | 26,702 | 26,264 | - Contract assets were $1,004 million at September 30, 2024, up from $716 million at December 31, 2023, while contract liabilities were $495 million at September 30, 2024, up from $439 million at December 31, 2023[29] - The Company had $4,069 million of transaction price allocated to remaining performance obligations at September 30, 2024, with the majority expected to be recognized within 12 months[29] 3. Assets held for sale and divestitures This section reports on assets classified as held for sale and completed divestiture activities, including the European Lime operations - CRH completed the divestiture of its European Lime operations in three phases, with the final phase closing on August 30, 2024, resulting in a pretax gain of $163 million, reported in the Europe Materials Solutions segment[30] 4. Acquisitions This section details CRH's acquisition activities, including cash consideration, key targets like Hunter and Adbri, and their post-acquisition financial impact - During the nine months ended September 30, 2024, CRH completed 28 acquisitions for a total cash consideration of $3,853 million (net of cash acquired)[31] - Key acquisitions include Hunter (cement and readymixed concrete assets in Texas, US) for $2,106 million, reported in Americas Materials Solutions, and a 57% stake in Adbri (materials business in Australia) for $802 million, reported in Europe Materials Solutions[31] | Acquisition-related costs (in $ millions) | Three months ended Sep 30, 2024 | Three months ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | |:------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Adbri | 22 | – | 22 | – | | Hunter | 1 | – | 23 | – | | Other acquisitions | 5 | 4 | 7 | 6 | | Total acquisition-related costs | 28 | 4 | 52 | 6 | | Post-acquisition impact (in $ millions) | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | |:----------------------------------------|:-------------------------------|:-------------------------------| | Revenue | 733 | 114 | | Net loss attributable to CRH plc | (3) | (7) | 5. Accounts receivable, net This section provides a breakdown of CRH's accounts receivable, including trade receivables, construction contract assets, and the allowance for credit losses | Accounts receivable, net (in $ millions) | Sep 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | |:-----------------------------------------|:-------------|:-------------|:-------------| | Trade receivables | 5,106 | 3,574 | 4,766 | | Construction contract assets | 1,004 | 716 | 1,005 | | Total accounts receivable | 6,110 | 4,290 | 5,771 | | Less: allowance for credit losses | (151) | (149) | (139) | | Other current receivables | 463 | 366 | 340 | | Total accounts receivable, net | 6,422 | 4,507 | 5,972 | | Changes in allowance for credit losses (in $ millions) | 2024 | 2023 | |:-------------------------------------------------------|:-----|:-----| | At January 1 | 149 | 125 | | Provision for credit losses | 5 | 23 | | At September 30 | 151 | 139 | 6. Inventories This section presents the composition of CRH's inventories, categorized into raw materials, work-in-process, and finished goods | Inventories (in $ millions) | Sep 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | |:----------------------------|:-------------|:-------------|:-------------| | Raw materials | 2,182 | 1,865 | 2,007 | | Work-in-process | 246 | 186 | 175 | | Finished goods | 2,216 | 2,240 | 2,009 | | Total inventories | 4,644 | 4,291 | 4,191 | 7. Goodwill This section details the changes in goodwill by segment, including additions from acquisitions and adjustments for foreign currency and divestitures | Goodwill (in $ millions) | Dec 31, 2023 | Acquisitions | Foreign currency translation adjustment | Divestitures | Reclassified from held for sale | Sep 30, 2024 | |:-------------------------|:-------------|:-------------|:----------------------------------------|:-------------|:--------------------------------|:-------------| | Americas Materials Solutions | 4,417 | 1,270 | (11) | – | – | 5,676 | | Americas Building Solutions | 2,752 | 160 | 1 | – | – | 2,913 | | Europe Materials Solutions | 1,362 | 281 | 38 | (201) | 201 | 1,681 | | Europe Building Solutions | 627 | (3) | 12 | – | – | 636 | | Total | 9,158 | 1,708 | 40 | (201) | 201 | 10,906 | - There were no charges for goodwill impairment in the nine months ended September 30, 2024, and September 30, 2023[40] 8. Additional financial information This section provides supplementary details on other current and noncurrent assets, as well as accrued expenses and other current and noncurrent liabilities | Other current assets (in $ millions) | Sep 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | |:-------------------------------------|:-------------|:-------------|:-------------| | Prepayments | 323 | 285 | 290 | | Other financial assets | 163 | – | – | | Other | 208 | 193 | 140 | | Total other current assets | 694 | 478 | 430 | | Other noncurrent assets (in $ millions) | Sep 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | |:----------------------------------------|:-------------|:-------------|:-------------| | Pension assets | 296 | 271 | 358 | | Other | 534 | 361 | 334 | | Total other noncurrent assets | 830 | 632 | 692 | | Accrued expenses (in $ millions) | Sep 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | |:---------------------------------|:-------------|:-------------|:-------------| | Accrued payroll and employee benefits | 1,048 | 1,066 | 984 | | Other accruals | 1,465 | 1,230 | 1,473 | | Total accrued expenses | 2,513 | 2,296 | 2,457 | | Other current liabilities (in $ millions) | Sep 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | |:------------------------------------------|:-------------|:-------------|:-------------| | Dividends payable | – | 750 | 177 | | Construction contract liabilities | 495 | 439 | 404 | | Insurance liability | 178 | 171 | 168 | | Income tax payable | 148 | 129 | 196 | | Asset retirement obligations | 74 | 50 | 65 | | Finance lease liability | 60 | 31 | 25 | | Other | 748 | 502 | 640 | | Total other current liabilities | 1,703 | 2,072 | 1,675 | | Other noncurrent liabilities (in $ millions) | Sep 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | |:---------------------------------------------|:-------------|:-------------|:-------------| | Income tax payable | 816 | 712 | 635 | | Asset retirement obligations | 325 | 310 | 352 | | Finance lease liability | 168 | 86 | 71 | | Pension liability | 257 | 254 | 276 | | Insurance liability | 266 | 260 | 266 | | Other | 598 | 574 | 542 | | Total other noncurrent liabilities | 2,430 | 2,196 | 2,142 | 9. Debt This section outlines CRH's long-term debt, including new issuances, revolving credit facilities, and commercial paper programs | Long-term debt (in $ millions) | Effective interest rate | Sep 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | |:-------------------------------|:------------------------|:-------------|:-------------|:-------------| | Total long-term debt (ii) | | 13,737 | 11,535 | 11,222 | | Less: current portion of long-term debt (iii) | | (3,065) | (1,759) | (1,687) | | Long-term debt | | 10,672 | 9,776 | 9,535 | - The Company issued $750 million 5.200% Senior Notes due 2029 and $750 million 5.400% Senior Notes due 2034 in May 2024[51] - CRH maintains a multi-currency Revolving Credit Facility (RCF) of €3,500 million, maturing May 11, 2029, which was undrawn at September 30, 2024[55] - The Company has a $4,000 million U.S. Dollar Commercial Paper Program and a €1,500 million Euro Commercial Paper Program for short-term liquidity[55] 10. Fair value measurement This section describes CRH's fair value measurements, categorizing financial instruments into Level 1, 2, and 3 inputs, and detailing long-term debt and redeemable noncontrolling interests - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (quoted prices for similar assets/liabilities or observable market data), and Level 3 (unobservable data)[56] | Metric (in $ millions) | Sep 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | |:-----------------------|:-------------|:-------------|:-------------| | Carrying values of Long-term debt | 13,737 | 11,535 | 11,222 | | Fair values of Long-term debt | 13,599 | 11,337 | 10,471 | - The Company's Long-term debt obligations are Level 2 instruments, and redeemable noncontrolling interests are marked to fair value using Level 3 inputs, based on estimated potential outcomes of expected payment amounts and a discount rate between 6.23% and 7.16%[56] 11. Income taxes This section presents CRH's income tax expense and effective tax rates, explaining the factors influencing changes for the reporting periods | Income tax expense (in $ millions) | Three months ended Sep 30, 2024 | Three months ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | |:-----------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Total tax expense | 531 | 416 | 942 | 781 | | Effective income tax rate | 28% | 24% | 25% | 24% | - The increase in the effective tax rate for Q3 2024 (28% vs 24%) was mainly due to the timing of discrete items, including non-deductible acquisition-related costs, while the year-to-date increase (25% vs 24%) was driven by a change in income mix in higher tax jurisdictions and non-deductible acquisition costs, partially offset by tax deductions for share-based compensation and tax-exempt divestitures[58] 12. Earnings per share This section details the calculation of basic and diluted earnings per share attributable to CRH plc, including weighted average common shares outstanding | Earnings per share attributable to CRH plc | Three months ended Sep 30, 2024 | Three months ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | |:-------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Basic EPS | $1.99 | $1.81 | $4.03 | $3.36 | | Diluted EPS | $1.97 | $1.80 | $4.00 | $3.34 | | Weighted average common shares outstanding - basic (in millions) | 681.6 | 718.2 | 685.0 | 731.8 | | Weighted average common shares outstanding - diluted (in millions) | 685.5 | 722.1 | 690.0 | 736.6 | 13. Accumulated other comprehensive loss This section provides a breakdown of accumulated other comprehensive loss, including currency translation, cash flow hedges, and pension plan adjustments | Accumulated other comprehensive loss (in $ millions) | Currency Translation | Cash Flow Hedges | Pension and Other Postretirement Plans | Total | |:-----------------------------------------------------|:---------------------|:-----------------|:---------------------------------------|:------| | Balance at June 30, 2024 | (617) | (65) | (131) | (813) | | Net current-period other comprehensive income (loss) | 363 | (8) | (7) | 348 | | Balance at September 30, 2024 | (288) | (73) | (138) | (499) | | Reclassifications from Accumulated other comprehensive loss to income (in $ millions) | Three months ended Sep 30, 2024 | Three months ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | |:----------------------------------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Cash flow hedges (total) | 1 | 3 | 20 | 12 | | Pension and other postretirement plans (total) | (7) | (1) | (8) | (4) | | Total reclassifications | (6) | 2 | 12 | 8 | 14. Segment information This section presents CRH's financial performance by its four reportable segments, evaluating them based on Adjusted EBITDA - CRH operates through four reportable segments: Americas Materials Solutions, Americas Building Solutions, Europe Materials Solutions, and Europe Building Solutions, with segment performance evaluated using Adjusted EBITDA[62] | Segment Revenues (in $ millions) | Three months ended Sep 30, 2024 | Three months ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | |:---------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Americas Materials Solutions | 5,299 | 5,080 | 11,907 | 11,139 | | Americas Building Solutions | 1,757 | 1,738 | 5,566 | 5,547 | | Europe Materials Solutions | 2,795 | 2,617 | 7,212 | 7,409 | | Europe Building Solutions | 664 | 693 | 2,017 | 2,169 | | Total revenues | 10,515 | 10,128 | 26,702 | 26,264 | | Segment Adjusted EBITDA (in $ millions) | Three months ended Sep 30, 2024 | Three months ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | |:----------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Americas Materials Solutions | 1,484 | 1,284 | 2,692 | 2,184 | | Americas Building Solutions | 355 | 391 | 1,139 | 1,166 | | Europe Materials Solutions | 553 | 446 | 1,142 | 1,029 | | Europe Building Solutions | 62 | 69 | 181 | 211 | | Total Adjusted EBITDA | 2,454 | 2,190 | 5,154 | 4,590 | 15. Pension and other postretirement benefits This section details the net periodic benefit cost for CRH's U.S. and Non-U.S. pension and other postretirement plans | Net periodic benefit cost (in $ millions) | Three months ended Sep 30, 2024 (U.S.) | Three months ended Sep 30, 2023 (U.S.) | Nine months ended Sep 30, 2024 (U.S.) | Nine months ended Sep 30, 2023 (U.S.) | Three months ended Sep 30, 2024 (Non-U.S.) | Three months ended Sep 30, 2023 (Non-U.S.) | Nine months ended Sep 30, 2024 (Non-U.S.) | Nine months ended Sep 30, 2023 (Non-U.S.) | |:------------------------------------------|:---------------------------------------|:---------------------------------------|:--------------------------------------|:--------------------------------------|:-------------------------------------------|:-------------------------------------------|:------------------------------------------|:------------------------------------------| | Service cost | – | – | – | – | 10 | 9 | 30 | 25 | | Interest cost | 6 | 6 | 18 | 18 | 22 | 23 | 64 | 69 | | Expected return on assets | (5) | (5) | (15) | (15) | (23) | (23) | (67) | (69) | | Amortization of: Past service credit | – | – | – | – | (3) | (3) | (9) | (9) | | Amortization of: Actuarial loss | 1 | 1 | 3 | 3 | 1 | – | 3 | – | | Settlement gain (i) | – | – | – | – | – | – | (3) | – | | Net periodic benefit cost (ii) (iii) | 2 | 2 | 6 | 6 | 7 | 6 | 18 | 16 | - A settlement gain of $3 million related to pension plans divested as part of the European Lime operations sale is included in Other nonoperating income, net[67] 16. Variable interest entities This section describes CRH's consolidation of its Philippines operations as a Variable Interest Entity (VIE) and presents its financial summary - CRH consolidates its Philippines operations as a Variable Interest Entity (VIE), where it holds 40% equity but 55% share of earnings and distributions, and controls activities through contractual relationships[68] | VIE Financials (in $ millions) | Sep 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | |:-------------------------------|:-------------|:-------------|:-------------| | Total assets | 1,313 | 1,339 | 1,625 | | Total liabilities | 684 | 677 | 675 | | VIE Income Statement (in $ millions) | Three months ended Sep 30, 2024 | Three months ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | |:-------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Total revenues | 88 | 116 | 282 | 353 | | Gross profit | 2 | 11 | 20 | 21 | | Net loss | (10) | (5) | (22) | (23) | 17. Redeemable noncontrolling interests This section explains redeemable noncontrolling interests related to North American subsidiaries and their classification as temporary equity - Redeemable noncontrolling interests relate to two North American subsidiaries, where the noncontrolling interest holder has a put option and CRH has a call option, both exercisable based on EBITDA multiples, and these are classified as temporary equity[72] | Redeemable noncontrolling interests (in $ millions) | Balance at Dec 31, 2023 | Net income attributable to redeemable noncontrolling interests | Adjustment to the redemption value | Dividends paid | Balance at Sep 30, 2024 | |:----------------------------------------------------|:------------------------|:---------------------------------------------------------------|:-----------------------------------|:---------------|:------------------------| | Total | 333 | 21 | 30 | (23) | 361 | 18. Commitments and contingencies This section outlines CRH's letters of guarantee and letters of credit, confirming no material adverse legal proceedings - CRH has provided letters of guarantee totaling $12.9 billion for loans, borrowings, bank advances, and derivative obligations, and $0.5 billion for letters of credit due within one year, as of September 30, 2024[73] - The Company is not involved in any legal proceedings expected to have a material adverse effect on its financial condition, results of operations, or liquidity[74] 19. Subsequent events This section reports on events occurring after the reporting period, including the realignment of CRH's operating segments in Q4 2024 - During Q4 2024, CRH will realign its operating and reportable segments into three new segments: Americas Materials Solutions, Americas Building Solutions, and International Solutions, with historical segment financial information to be recast in the 2024 Form 10-K[76] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on CRH's operational and financial performance for the three and nine months ended September 30, 2024. It covers an overview of the business, financial highlights, capital allocation, development activities, outlook, detailed results of operations by income statement line item, and segment-specific performance. It also includes non-GAAP reconciliations, liquidity and capital resources, and critical accounting policies Introduction This introduction sets the context for management's discussion and analysis of CRH's financial and operational performance - The MD&A provides management's perspective on operational and financial performance for the three and nine months ended September 30, 2024, and should be read with the unaudited Condensed Consolidated Financial Statements[77] - Forward-looking statements are subject to risks, and past financial results may not indicate future operating results due to economic cycles, seasonality, and government expenditures[77] Overview This section provides a high-level description of CRH's business as a leading building materials solutions provider and its growth strategy - CRH is a leading provider of building materials solutions, offering end-to-end value-added solutions for complex construction challenges, integrating essential materials, value-added building products, and construction services[78] - The Company holds market leadership positions in North America and Europe, with the U.S. expected to drive future growth due to economic expansion, population growth, and public investment, while European business benefits from growth in Central and Eastern Europe and repair/remodel demand in Western Europe[78] - CRH's growth strategy includes value creation through acquisitions, which have accounted for approximately two-thirds of its growth over the last decade, by integrating businesses and generating synergies[78] Seasonality This section explains the seasonal nature of the construction industry and its impact on CRH's quarterly financial results - Construction industry activity is seasonal, with higher activity in spring and summer and significant reductions in winter due to inclement weather, which can impact demand and production processes, therefore, quarterly results may not be indicative of full-year performance[79] Financial performance highlights This section summarizes CRH's key financial metrics, including revenues, net income, and Adjusted EBITDA, for the reporting periods | Metric | Three months ended Sep 30, 2024 | YoY Change | |:-------|:--------------------------------|:-----------| | Total revenues | $10.5 billion | +4% | | Net income | $1.4 billion | +5% | | Adjusted EBITDA | $2.5 billion | +12% | | Net income margin | 13.2% | +20 bps | | Adjusted EBITDA margin | 23.3% | +170 bps | | Basic EPS | $1.99 | | | Metric | Nine months ended Sep 30, 2024 | YoY Change | |:-------|:-------------------------------|:-----------| | Total revenues | $26.7 billion | +2% | | Net income | $2.8 billion | +13% | | Adjusted EBITDA | $5.2 billion | +12% | | Net income margin | 10.5% | +100 bps | | Adjusted EBITDA margin | 19.3% | +180 bps | | Basic EPS | $4.03 | | Capital allocation highlights This section outlines CRH's capital allocation activities, including dividends, share buybacks, acquisitions, and capital expenditures | Capital Allocation (Nine months ended Sep 30) | 2024 (in $ billions) | 2023 (in $ billions) | YoY Change (in $ billions) | |:----------------------------------------------|:---------------------|:---------------------|:---------------------------| | Cash paid to shareholders through dividends | $1.5 | $0.8 | +$0.7 | | Cash returned through share buybacks | $1.0 | $2.0 | -$1.0 | | Acquisitions completed (total consideration) | $3.9 | $0.6 | +$3.3 | | Development and replacement capital expenditure | $1.6 | $1.2 | +$0.4 | - CRH transitioned to quarterly dividends in Q1 2024, with an annualized increase of 5% on the prior year, and a further $0.3 billion share buyback tranche was announced, to be completed by February 26, 2025[82] Development Review This section reviews CRH's acquisition and divestiture activities, highlighting significant transactions like the Adbri acquisition - In Q3 2024, CRH completed 12 acquisitions for $1.4 billion, including a majority stake in Adbri Ltd (Australia) for $0.8 billion, enhancing its cement, concrete, and aggregates business[83] - For the nine months ended September 30, 2024, 28 acquisitions were completed for $3.9 billion, while cash proceeds from divestitures and disposals of long-lived assets were $1.2 billion, primarily from the European Lime operations divestiture[83] Outlook This section provides CRH's forward-looking guidance, expectations for market demand, and potential impairment charges for future periods - CRH reaffirms its 2024 guidance midpoint, citing strong financial performance, positive business momentum, and portfolio contributions[84] - For 2025, positive underlying demand is expected across key markets, supported by public infrastructure investment and re-industrialization, with a lower interest rate environment anticipated to aid residential construction recovery[84] - Potential non-cash impairment charges of $0.3-$0.4 billion may be recognized in Q4 2024, related to an equity method investment in China and the Architectural Products reporting unit in Europe Building Solutions, due to challenging market conditions[85][137] Results of Operations This section provides a detailed analysis of CRH's income statement line items, explaining the drivers behind changes in revenues, profits, and expenses Total revenues This section details the company's total revenues for the reporting periods - Total revenues increased by 4% to $10.5 billion for the three months ended September 30, 2024, driven by pricing progress and acquisitions, partially offset by adverse weather and divestitures[88] - For the nine months ended September 30, 2024, total revenues rose 2% to $26.7 billion, reflecting similar trends[88] Gross profit This section analyzes the company's gross profit and gross profit margin for the reporting periods - Gross profit for Q3 2024 increased 8% to $4.1 billion, with gross profit margin expanding by 140bps to 38.6%, due to a 4% revenue increase and only a 1% rise in cost of revenues, despite higher labor costs and depreciation[89] - For the nine months ended September 30, 2024, gross profit increased 6% to $9.5 billion, with gross profit margin up 140bps to 35.7%, aided by a 19% reduction in energy costs due to divestitures, lower energy prices, and reduced activity levels[89] Selling, general and administrative expenses This section details the company's selling, general and administrative expenses and their primary drivers - SG&A expenses increased 10% to $2.2 billion in Q3 2024, primarily due to a 13% rise in labor costs from increased headcount (acquisitions) and wage inflation, along with a 6% increase in haulage costs[90] - For the nine months ended September 30, 2024, SG&A expenses increased 5% to $5.9 billion, mainly driven by a 10% increase in labor costs[90] Gain on disposal of long-lived assets This section reports on gains recognized from the disposal of long-lived assets for the reporting periods - Gain on disposal of long-lived assets increased by $74 million to $89 million in Q3 2024 and by $161 million to $199 million for the nine months ended September 30, 2024, mainly due to land asset disposals[91] Interest income This section details the company's interest income for the reporting periods - Interest income decreased by $29 million to $33 million in Q3 2024 and by $26 million to $112 million for the nine months ended September 30, 2024, primarily due to lower cash deposits[92] Interest expense This section details the company's interest expense for the reporting periods - Interest expense increased by $33 million to $164 million in Q3 2024 and by $167 million to $452 million for the nine months ended September 30, 2024, mainly due to higher gross debt balances[93] Other nonoperating income, net This section details the company's other nonoperating income, net, including gains on divestitures and investments - Other nonoperating income, net, increased significantly to $62 million in Q3 2024 (from $1 million in Q3 2023) and to $246 million for the nine months ended September 30, 2024 (from $3 million in 2023), primarily driven by gains on divestitures and unrealized gains on investments[94] Income tax This section details the company's income tax expense and effective tax rates for the reporting periods - Income tax expense was $531 million in Q3 2024 (effective rate 28%) compared to $416 million in Q3 2023 (effective rate 24%), and for the nine months, it was $942 million (effective rate 25%) compared to $781 million (effective rate 24%) in 2023[95] - The increase in effective tax rates was mainly due to the timing of discrete items, non-deductible acquisition-related costs, and a change in income mix in higher tax jurisdictions[95] Income from equity method investments This section details the company's income derived from equity method investments - Income from equity method investments increased by $11 million to $25 million in Q3 2024 and by $6 million to $27 million for the nine months ended September 30, 2024[96] Net income This section details the company's net income and its primary drivers for the reporting periods - Net income increased by $0.1 billion to $1.4 billion in Q3 2024 and by $0.3 billion to $2.8 billion for the nine months ended September 30, 2024, driven by higher gross profit and gains on disposals/divestitures, offsetting increased interest and SG&A expenses[97] Net income attributable to CRH plc and earnings per share This section details net income attributable to CRH plc and the basic earnings per share for the reporting periods - Net income attributable to CRH plc increased by $0.1 billion to $1.4 billion in Q3 2024 and by $0.3 billion to $2.8 billion for the nine months ended September 30, 2024[98] | Metric | Three months ended Sep 30, 2024 | Three months ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | |:-------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Basic EPS | $1.99 | $1.81 | $4.03 | $3.36 | Segments This section analyzes the financial performance of CRH's four reportable segments, focusing on revenues and Adjusted EBITDA - CRH is organized into four reportable segments: Americas Materials Solutions, Americas Building Solutions, Europe Materials Solutions, and Europe Building Solutions, with segment profit measured by Adjusted EBITDA[100] Americas Materials Solutions This section presents the financial performance of the Americas Materials Solutions segment, including revenues and Adjusted EBITDA | Metric (in $ millions) | Three months ended Sep 30, 2024 | % change | Nine months ended Sep 30, 2024 | % change | |:-----------------------|:--------------------------------|:---------|:-------------------------------|:---------| | Total revenues | 5,299 | +4% | 11,907 | +7% | | Adjusted EBITDA | 1,484 | +16% | 2,692 | +23% | | Adjusted EBITDA margin | 28.0% | | 22.6% | | - Q3 2024 revenues were up 4% (1% organic) due to positive pricing (aggregates +10%, cement +9%) despite adverse weather impacting volumes, and Adjusted EBITDA increased 16% (12% organic) due to pricing, cost management, and land asset sales[101] - Nine-month revenues were up 7% (4% organic) with strong pricing, and Adjusted EBITDA increased 23% (19% organic) driven by pricing and operational efficiencies, expanding margin by 300bps[102] Americas Building Solutions This section presents the financial performance of the Americas Building Solutions segment, including revenues and Adjusted EBITDA | Metric (in $ millions) | Three months ended Sep 30, 2024 | % change | Nine months ended Sep 30, 2024 | % change | |:-----------------------|:--------------------------------|:---------|:-------------------------------|:---------| | Total revenues | 1,757 | +1% | 5,566 | 0% | | Adjusted EBITDA | 355 | (9%) | 1,139 | (2%) | | Adjusted EBITDA margin | 20.2% | | 20.5% | | - Q3 2024 revenues increased 1% (1% organic decline) due to acquisitions offsetting adverse weather and subdued new-build residential demand, and Adjusted EBITDA declined 9% (11% organic decline) with margin down 230bps[103] - Nine-month revenues were flat (2% organic decline) due to acquisitions offsetting weak residential demand, and Adjusted EBITDA declined 2% (5% organic decline) with margin down 50bps[104] Europe Materials Solutions This section presents the financial performance of the Europe Materials Solutions segment, including revenues and Adjusted EBITDA | Metric (in $ millions) | Three months ended Sep 30, 2024 | % change | Nine months ended Sep 30, 2024 | % change | |:-----------------------|:--------------------------------|:---------|:-------------------------------|:---------| | Total revenues | 2,795 | +7% | 7,212 | (3%) | | Adjusted EBITDA | 553 | +24% | 1,142 | +11% | | Adjusted EBITDA margin | 19.8% | | 15.8% | | - Q3 2024 revenues increased 7% (3% organic decline) due to Adbri acquisition and positive pricing, offset by subdued Western European residential activity, and Adjusted EBITDA increased 24% (18% organic) due to pricing, lower energy costs, and acquisitions[107] - Nine-month revenues declined 3% (5% organic decline) due to European Lime divestiture and lower Western European volumes, partially offset by Adbri acquisition and Central/Eastern European growth, and Adjusted EBITDA increased 11% (13% organic) with margin up 190bps[108] Europe Building Solutions This section presents the financial performance of the Europe Building Solutions segment, including revenues and Adjusted EBITDA | Metric (in $ millions) | Three months ended Sep 30, 2024 | % change | Nine months ended Sep 30, 2024 | % change | |:-----------------------|:--------------------------------|:---------|:-------------------------------|:---------| | Total revenues | 664 | (4%) | 2,017 | (7%) | | Adjusted EBITDA | 62 | (10%) | 181 | (14%) | | Adjusted EBITDA margin | 9.3% | | 9.0% | | - Q3 2024 revenues declined 4% due to subdued new-build residential activity, and Adjusted EBITDA declined 10%[110] - Nine-month revenues declined 7% due to continued subdued new-build residential market activity, and Adjusted EBITDA declined 14% with margin down 70bps, partially offset by disciplined commercial management and cost savings[111] Non-GAAP Reconciliation and Supplementary Information This section provides reconciliations and definitions for non-GAAP financial measures used by management, such as Adjusted EBITDA and Net Debt Adjusted EBITDA This section provides a reconciliation and definition of Adjusted EBITDA, a key non-GAAP performance metric - Adjusted EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, depletion, amortization, loss on impairments, gain/loss on divestitures and unrealized gain/loss on investments, income/loss from equity method investments, substantial acquisition-related costs and pension expense/income excluding current service cost component[113] | Metric (in $ millions) | Three months ended Sep 30, 2024 | Three months ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | |:-----------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Net income | 1,389 | 1,318 | 2,812 | 2,499 | | Adjusted EBITDA | 2,454 | 2,190 | 5,154 | 4,590 | | Net income margin | 13.2% | 13.0% | 10.5% | 9.5% | | Adjusted EBITDA margin | 23.3% | 21.6% | 19.3% | 17.5% | Net Debt This section defines Net Debt and provides a reconciliation of its components, offering insight into the company's leverage - Net Debt is used by management to provide insight into the Company's current debt position less available cash, comprising short and long-term debt, finance lease liabilities, cash and cash equivalents, and current/noncurrent derivative financial instruments (net)[115] | Net Debt (in $ millions) | Sep 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | |:-------------------------|:-------------|:-------------|:-------------| | Short and long-term debt | (13,890) | (11,642) | (11,395) | | Cash and cash equivalents (i) | 2,978 | 6,390 | 5,722 | | Finance lease liabilities | (228) | (117) | (96) | | Derivative financial instruments (net) | (35) | (37) | (118) | | Net Debt | (11,175) | (5,406) | (5,887) | Organic Revenue and Organic Adjusted EBITDA This section defines and explains organic revenue and organic Adjusted EBITDA, used to assess underlying business performance - Organic revenue and organic Adjusted EBITDA are used to assess the performance of pre-existing operations by excluding the incremental contributions from current and prior year acquisitions and divestitures, the impact of exchange translation, and one-off items[118] - Acquisitions contributed $0.6 billion in revenue and $0.1 billion in Adjusted EBITDA for Q3 2024, and $1.0 billion in revenue and $0.2 billion in Adjusted EBITDA for the nine months ended September 30, 2024[118] - Divestitures had a negative impact of $0.2 billion on revenue and $46 million on Adjusted EBITDA for Q3 2024, and a negative $0.5 billion on revenue and $0.1 billion on Adjusted EBITDA for the nine months ended September 30, 2024[118] Liquidity and Capital Resources This section discusses CRH's sources and uses of liquidity, including cash flows, debt facilities, and contractual obligations - CRH's primary liquidity sources are cash flows from operating activities, cash and cash equivalents, commercial paper programs, and committed credit lines, expected to meet working capital, capital expenditures, dividends, share repurchases, and debt maturities[119] - Total short and long-term debt was $13.9 billion at September 30, 2024, up from $11.6 billion at December 31, 2023, and Net Debt increased to $11.2 billion at September 30, 2024, from $5.4 billion at December 31, 2023, due to acquisitions, shareholder returns, and capital expenditures[119] - CRH repurchased 13.2 million ordinary shares for $1.0 billion in the first nine months of 2024 and paid $1.5 billion in dividends[119] Cash flows This section analyzes the company's cash flow activities from operations, investing, and financing for the reporting periods - Net cash provided by operating activities decreased by $0.3 billion to $2.3 billion for the nine months ended September 30, 2024, primarily due to higher working capital outflows[121] - Net cash used in investing activities increased by $2.7 billion to $4.4 billion for the nine months ended September 30, 2024, driven by $3.9 billion in acquisitions and $1.6 billion in capital expenditures, partially offset by $1.1 billion from divestitures[123] - Net cash used in financing activities was $1.1 billion for the nine months ended September 30, 2024, consistent with the prior year, including $3.5 billion from debt issuances and $1.9 billion in debt payments, alongside $1.5 billion in dividends and $1.2 billion in share repurchases[124] Debt Facilities This section details CRH's debt facilities, including expected maturities and the undrawn Revolving Credit Facility - CRH expects $1.8 billion in debt maturities for Q4 2024, with $1.7 billion related to Commercial Paper Programs[125] - The Company's multi-currency Revolving Credit Facility (RCF) of €3.5 billion, maturing in May 2029, was undrawn at September 30, 2024[127] Guarantees This section outlines the letters of guarantee and letters of credit provided by CRH for subsidiary obligations - CRH has provided $12.9 billion in letters of guarantee for subsidiary obligations (loans, borrowings, bank advances, derivatives) and $0.5 billion for letters of credit due within one y