CRH(CRH) - 2024 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements CRH reported Q1 2024 total revenues of $6.53 billion, a 2% increase, achieving $114 million net income, a turnaround from a prior year loss, with $46.3 billion in assets Condensed Consolidated Statements of Income (Unaudited) | Indicator | Three months ended March 31, 2024 ($M) | Three months ended March 31, 2023 ($M) | | :--- | :--- | :--- | | Total revenues | 6,533 | 6,427 | | Gross profit | 1,807 | 1,619 | | Operating income | 28 | 2 | | Net income (loss) | 114 | (31) | | Net income (loss) attributable to CRH plc | 116 | (28) | | Basic EPS ($) | 0.16 | (0.05) | | Diluted EPS ($) | 0.16 | (0.05) | Condensed Consolidated Balance Sheets (Unaudited) | Indicator | March 31, 2024 ($M) | December 31, 2023 ($M) | March 31, 2023 ($M) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 3,308 | 6,341 | 4,650 | | Total current assets | 13,709 | 16,885 | 14,230 | | Total assets | 46,333 | 47,469 | 45,107 | | Total current liabilities | 9,997 | 10,013 | 9,255 | | Long-term debt | 9,680 | 9,776 | 7,583 | | Total liabilities | 25,591 | 25,848 | 22,963 | | Total equity | 20,416 | 21,288 | 21,837 | Condensed Consolidated Statements of Cash Flows (Unaudited) | Indicator | Three months ended March 31, 2024 ($M) | Three months ended March 31, 2023 ($M) | | :--- | :--- | :--- | | Net cash used in operating activities | (712) | (671) | | Net cash used in investing activities | (2,096) | (492) | | Net cash used in financing activities | (176) | (191) | | Decrease in cash and cash equivalents | (3,081) | (1,286) | Notes to Condensed Consolidated Financial Statements Notes detail Q1 2024 corporate activities, including the $2.1 billion Hunter acquisition and $0.7 billion European Lime divestiture, impacting segment revenues and debt - On February 9, 2024, the Company acquired a portfolio of cement and readymixed concrete assets in Texas (the 'Hunter' acquisition) for a total consideration of $2.1 billion[61] - The company divested its Lime operations in Germany, Czech Republic, Ireland, and the United Kingdom, resulting in a pretax gain of $115 million; the third phase of the divestiture (Poland) is expected to close in H2 2024[60] Total Revenues by Segment (Q1 2024 vs Q1 2023) | Segment | Q1 2024 Revenue ($M) | Q1 2023 Revenue ($M) | | :--- | :--- | :--- | | Americas Materials Solutions | 2,202 | 1,895 | | Americas Building Solutions | 1,693 | 1,661 | | Europe Materials Solutions | 2,013 | 2,178 | | Europe Building Solutions | 625 | 693 | | Total | 6,533 | 6,427 | Adjusted EBITDA by Segment (Q1 2024 vs Q1 2023) | Segment | Q1 2024 Adjusted EBITDA ($M) | Q1 2023 Adjusted EBITDA ($M) | | :--- | :--- | :--- | | Americas Materials Solutions | 15 | (35) | | Americas Building Solutions | 308 | 301 | | Europe Materials Solutions | 90 | 68 | | Europe Building Solutions | 32 | 52 | | Total | 445 | 386 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported a strong start to the year with $6.5 billion revenue and $445 million Adjusted EBITDA, driven by pricing and acquisitions, while increasing net debt to $9.6 billion - Total revenues increased 2% to $6.5 billion, and Adjusted EBITDA increased 15% to $445 million compared to Q1 2023[140] - The company completed eight acquisitions for a total of $2.2 billion, including the $2.1 billion acquisition of assets in Texas, and realized $0.7 billion in proceeds from divestitures, primarily the European Lime operations[141][143] - Returned $0.4 billion to shareholders via share buybacks and transitioned to a quarterly dividend of $0.35 per share[141] - Net Debt increased from $5.4 billion at year-end 2023 to $9.6 billion at March 31, 2024, reflecting outflows for acquisitions, dividends, and share buybacks[186] - The full-year outlook for 2024 remains positive, expecting a favorable market backdrop, continued pricing momentum, and benefits from infrastructure activity, assuming normal weather patterns[144] Results of Operations Total revenues increased 2% to $6.5 billion, driven by pricing and acquisitions, with gross profit rising 12% to $1.8 billion due to lower energy costs - Gross profit increased 12% to $1.8 billion, and gross margin improved by 250bps to 27.7%, mainly due to a 26% decrease in energy costs[121] - SG&A expenses rose 10% to $1.8 billion, primarily reflecting a 12% increase in labor costs from higher headcount and wage inflation[148] - Other nonoperating income was $161 million, compared to nil in the prior year, mainly due to gains on the divestiture of the European Lime operations[172] - Interest expense increased by $52 million to $133 million, driven by higher gross debt balances and interest rates on new debt[149] Segment Performance Analysis Segment performance varied, with Americas Materials Solutions leading revenue growth at 16%, while European segments experienced declines due to lower volumes and divestitures Americas Materials Solutions Performance | Metric | Q1 2023 ($M) | Change ($M) | Q1 2024 ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | 1,895 | +307 | 2,202 | +16% | | Adjusted EBITDA | (35) | +50 | 15 | n/m | Americas Building Solutions Performance | Metric | Q1 2023 ($M) | Change ($M) | Q1 2024 ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | 1,661 | +32 | 1,693 | +2% | | Adjusted EBITDA | 301 | +7 | 308 | +2% | Europe Materials Solutions Performance | Metric | Q1 2023 ($M) | Change ($M) | Q1 2024 ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | 2,178 | (165) | 2,013 | (8)% | | Adjusted EBITDA | 68 | +22 | 90 | +32% | Europe Building Solutions Performance | Metric | Q1 2023 ($M) | Change ($M) | Q1 2024 ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | 693 | (68) | 625 | (10)% | | Adjusted EBITDA | 52 | (20) | 32 | (38)% | Liquidity and Capital Resources CRH maintains strong liquidity with $3.3 billion cash and $3.8 billion undrawn facilities, despite total debt increasing to $12.7 billion due to acquisitions - At March 31, 2024, CRH had cash and cash equivalents of $3.3 billion and $3.8 billion of undrawn committed facilities[214] - Total short and long-term debt was $12.7 billion at March 31, 2024, up from $9.8 billion at March 31, 2023[214] - The weighted average maturity of term debt was 7.8 years[214] - In April 2024, the U.S. Dollar Commercial Paper Program was increased from $2.0 billion to $4.0 billion[168][214] Quantitative and Qualitative Disclosures About Market Risk CRH manages market risks from interest rates, foreign exchange, and commodity prices using derivatives, with 65% of debt fixed rate and a 100bps rate hike impacting earnings by $13 million - The company's primary market risks are interest rate, foreign exchange, and commodity price fluctuations[227] - At March 31, 2024, 65% of total debt was fixed rate and 35% was floating rate; a 100bps increase in interest rates would result in an approximately $13 million unfavorable impact on before-tax earnings[205] - The company uses foreign exchange forward contracts to hedge currency risk; a 10% weakening of foreign currencies against the U.S. Dollar would decrease the fair value of these contracts by approximately $135 million, largely offset by gains on the underlying hedged exposures[206] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2024, the Chief Executive and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[207] - There were no changes in internal control over financial reporting during the first quarter that have materially affected, or are reasonably likely to materially affect, internal controls[232] PART II OTHER INFORMATION Legal Proceedings CRH is not involved in any legal proceedings expected to have a material adverse effect on its financial condition, operations, or liquidity - CRH is not involved in any proceedings that it believes could reasonably be expected to have a material adverse effect on the Company's financial condition, results of operations or liquidity[136][243] Risk Factors No material changes to risk factors were reported compared to the company's 2023 Annual Report on Form 10-K - There have been no material changes with respect to the risk factors disclosed in 'Item 1A. Risk Factors' of our 2023 Form 10-K[210] Issuer Purchases of Equity Securities In Q1 2024, CRH repurchased 5.04 million Ordinary Shares for $388 million, bringing total program repurchases to $7.5 billion since May 2018 Issuer Purchases of Equity Securities (Q1 2024) | Period | Total Shares Purchased | Average Price Paid per Share ($) | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | Jan 2024 | 4,613,696 | 68.59 | 1,988,696 | | Feb 2024 | 1,706,682 | 75.82 | 1,706,682 | | Mar 2024 | 1,346,883 | 84.15 | 1,346,883 | | Total | 7,667,261 | - | 5,042,261 | - In Q1 2024, the Company returned a further $0.4 billion of cash to shareholders through the repurchase of 5.04 million Ordinary Shares[211] Mine Safety Disclosures Mine safety violations and regulatory information are disclosed in Exhibit 95 of this quarterly report, as required by the Dodd-Frank Act - The information concerning mine safety violations or other regulatory matters is included in Exhibit 95 to this Quarterly Report[212] Exhibits This report includes key exhibits such as CEO/CFO certifications (SOX), mine safety data, and Inline XBRL documents - Key exhibits filed with the report include: - 31.1 & 31.2: CEO and CFO Certifications (SOX 302) - 32.1 & 32.2: CEO and CFO Certifications (SOX 906) - 95.1: Disclosure of Mine Safety and Health Administration (MSHA) Safety Data - 101: Inline eXtensible Business Reporting Language (iXBRL)[237]