CRH 2026年第三季法說會：更新財測指引，Arcosa綜效與60億美元股票回購

CRH (NYSE: CRH) 發布強韌的 2026 年第三季財報，受惠於良好的定價策略、併購案以及基礎設施需求，抵銷了低迷的住宅市場活動，以及能源、原料與運輸成本上升的影響。管理層調整了全年展望，預計調整後 EBITDA 為 78 億美元至 80 億美元。

重點速覽

• 第三季營收年增 3% 至 114 億美元，調整後 EBITDA 則持平於 27 億美元。
• 調整後 EBITDA 利潤率約為 24%，下降 80 個基點。若扣除去年同期的一次性收益，利潤率與 2025 年第三季大致持平。
• CRH 預計 2026 年調整後 EBITDA 為 78 億美元至 80 億美元，淨利為 31 億美元至 33 億美元，調整後稀釋每股盈餘 (EPS) 為 5.37 美元至 5.59 美元。
• 公司已完成對 Arcosa 價值 85 億美元的併購案，並預計在第三年達到約 1.75 億美元的年化成本協同效應，其中第一年將實現 6000 萬美元。
• CRH 啟動了一項規模 60 億美元、執行至 2030 年底的股票回購計畫，並將季度股利提高 5% 至每股 0.39 美元。
• Velocity 轉型計畫預計將在 2028 年底前，每年創造至少 4 億美元的調整後 EBITDA 年化效益。

關鍵財務數據

業務與營運表現

美洲建材解決方案

在價格調整、併購以及 CRH 整合投資組合的支撐下，營收成長 6%，調整後 EBITDA 成長 1%。基礎材料 (Essential Materials) 營收成長 19%。

骨材 (Aggregates) 銷量成長 2%，報告價格上漲 5%，若經產品組合調整則上漲 6%。水泥銷量持平，平均水泥價格下降 2%。Eco Material 的銷量與價格均實現中個位數成長。

道路解決方案 (Road Solutions) 營收成長 2%，主因瀝青與預拌混凝土價格調漲。然而，能源、原料與運輸成本大幅上升壓低了利潤率。管理層指出，柴油價格在短時間內自 7 月初至中旬的低點大幅上漲 40%，使得季末成本回收難度增加。

美洲建築解決方案

營收下降 3%，調整後 EBITDA 下降 18%，反映出資產剝離、住宅市場活動低迷以及缺乏去年同期的土地出售收益。若扣除土地出售收益，調整後 EBITDA 與利潤率均高於去年同期。

資料中心、水利基礎設施與能源基礎設施的需求保持強勁。

國際解決方案

營收成長 1%，調整後 EBITDA 成長 6%，利潤率擴增 110 個基點。該業務受益於特定市場的活動增加、價格調漲以及嚴格的成本控制。

歐洲需求獲得基礎設施建設與再工業化的支撐。澳洲則持續受惠於基礎設施活動、營運效率提升以及併購效應。

併購 Arcosa

CRH 提早完成了價值 85 億美元的 Arcosa 併購案。Arcosa 每年可增加 3,500 萬噸骨材產量，使 CRH 在美國的年化總產量突破 2.65 億噸。

管理層預計在第三年達到約 1.75 億美元的年化成本協同效應，其中第一年預計實現 6,000 萬美元。協同效應來自於生產效率提升、物流最佳化、提高原料自給率、採購簡化以及後勤支援功能的精簡。

Arcosa 的工程結構 (Engineered Structures) 業務擴大了 CRH 在美國輸電、電網現代化、電氣化與資料中心建設領域的參與度。管理層預期該業務在未來三至四年內將維持雙位數營收成長，並表示訂單交期已延長至 12 個月。

資本配置與 Velocity 計畫

今年以來，CRH 在骨材、水泥質材料、道路與水利領域共投資了 104 億美元，其中包括用於 Arcosa 的 85 億美元以及另外 27 筆併購案的 19 億美元。截至第三季，公司還完成了 19 億美元的非核心資產出售，並投入 12 億美元於成長型資本支出。

新發布的 60 億美元買回計畫將持續執行至 2030 年底。CRH 亦宣佈發放每股 0.39 美元的季度股利，年增 5%。管理層預計槓桿率將隨著時間推移正常化至約 2 倍左右，同時維持投資級信用評等。

Velocity 是一項為期兩年的計畫，專注於組織簡化、技術、人工智慧 (AI)、數據與加速決策。CRH 預計到 2028 年底每年將創造至少 4 億美元的調整後 EBITDA 年化效益，其中約 40% 將於 2027 年實現，其餘則於 2028 年底前達成。

公司預計產生約 4 億美元的一次性轉型成本。其中約三分之二預計發生在 2026 年下半年及 2027 年期間，剩餘的三分之一則在 2028 年。CRH 已將其 2030 年調整後 EBITDA 利潤率目標調升至約 24%，即先前預測區間的頂端。

管理層財務指引

此展望假設 2026 年剩餘時間的天氣正常、能源成本維持在當前較高水準，且無重大額外地緣政治或總體經濟動盪。Arcosa 將在今年最後兩個月貢獻收益，管理層形容這是季節性淡季。

針對 2027 年，管理層預計價格與成本間利差將轉正，利潤率也將重返擴增軌道。CRH 預期骨材價格將呈高個位數成長，而整體市場需求持平至微幅成長。美國水泥質材料的銷量與價格預計將呈低個位數成長。國際水泥銷量預計成長低個位數，價格則成長中個位數。

管理層亦預計 2027 年整體成本通膨率約為中個位數。公司預計將受惠於 Arcosa 全年的貢獻、併購協同效應以及 Velocity 計畫的初步節省效果。

風險與關注焦點

• 高企的柴油、能源、原料與運輸成本壓低了第三季獲利能力，且仍包含在全年展望中。
• 受負擔能力壓力與高利率影響，夏季美國住宅市場活動進一步走弱。管理層預計最早要到 2028 年年中才可能出現實質復甦。
• 第四季業績在季節性上屬於小季，且可能受寒冬過早來臨或氣候異常溫和影響。
• CRH 依靠定價策略、燃料附加費與營運措施，以求在 2027 年恢復正向的價差利潤。
• 公司必須在推動集團全方位 Velocity 轉型計畫的同時，執行 Arcosa 的整合並實現預期的協同效應。
• 多年期美國公路資金重新授權案仍待通過，但管理層指出該案擁有跨黨派支持、招標活動穩定，且待完成訂單與去年同期相當。

分析師問答亮點

2026 年指引修訂：管理層將修訂後的展望歸因於第三季表現、能源與運輸成本大幅上漲、美國住宅市場進一步疲軟，以及對第四季的預期。指引假設能源成本維持高位且天氣條件正常。

2027 年定價與利潤率：CRH 表示骨材價格調漲措施已在市場上推行。儘管面臨成本通膨環境，管理層仍預期 2027 年骨材價格將呈現高個位數成長，且利潤率將擴增。

股票買回與併購之比較：管理層表示，60 億美元的買回計畫與至 2030 年的 400 億美元資本配置架構保持一致。CRH 預計將持續積極執行買回，同時保留實施紀律化併購的能力，並維持其投資級信用評等。

Velocity 計畫執行：在目標每年 4 億美元的年化效益中，約有 40% 預計於 2027 年實現。相關措施包括減少管理層級、最佳化瀝青燃料使用，以及在 42 個大型採石場部署聯網平台。採石場計畫預計可減少 7% 至 10% 的變動成本，而瀝青廠燃料計畫目標則是節省 10% 至 15% 的天然氣使用量。

基礎設施資金：管理層表示，目前美國約 40% 的基礎設施資金尚未動用。州政府資金約占基礎基礎設施投資的 60%，而 CRH 的招標活動與待完成訂單與去年同期大致保持一致。

完整法說會逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Good day, and welcome to the CRH Third Quarter 2026 Results Presentation. My name is Krista, and I will be your operator today. [Operator Instructions]

At this time, I'd like to turn the conference over to Jim Mintern, CRH Chief Executive Officer, to begin the conference. Please go ahead, sir.

Jim Mintern

Hello, everyone. Jim Mintern, here, CEO of CRH, and you're all very welcome to our Q3 2026 Results Presentation and Conference Call. Joining me on the call is Aylwyn Bryan, our CFO; Randy Lake, our COO; and Danilo Juvane, our Head of Investor Relations.

Before we get started, I'll hand over to Danilo for some opening brief remarks.

Danilo Juvane

Thanks, Jim, and hello, everyone. I'd like to draw your attention to Slide 2, shown here on the screen. During our presentation, we will be making some forward-looking statements relating to our future plans and expectations. These are subject to certain risks and uncertainties and actual results and outcomes could differ materially due to factors outlined on this slide. For more details, please refer to Slide 2 and to our filings with the SEC, including our annual report on Form 10-K and our quarterly reports on Form 10-Q, which are available on our website.

We will also refer to certain non-GAAP financial measures. Definitions and reconciliations are included in the appendix of the presentation and in our earnings release.

I'll now hand it back to Jim.

Jim Mintern

Over the next 20 minutes or so, we will take you through a brief presentation of our results for the third quarter of the year, highlighting the key components of our operating performance, our recent capital allocation activities as well as providing you with an update on our expectations for the year as a whole. We will also spend some time discussing the continued execution of our strategy and Velocity, a recently launched transformation initiative that will help us build a better CRH and deliver further value creation for our shareholders. Based on the visibility that we have at this moment in time, we will also share our thoughts on some of the trends we are seeing across our markets as we look ahead to 2027.

So first, on Slide 4, let me take you through some key messages from our results. Overall, we delivered a resilient third quarter performance despite contending with a challenging cost environment and subdued residential activity across many of our markets. Looking ahead to the remainder of the year and based on the current momentum that we see across our business, we are updating our financial guidance and now expect full year adjusted EBITDA to be between $7.8 billion and $8.0 billion, representing another year of growth and value creation for CRH.

The strength of our balance sheet and cash generation capability enables us to invest for future growth while also delivering significant returns to shareholders. Today, we announced a new $6 billion share buyback program to run through the end of 2030, demonstrating our continued focus on disciplined and efficient capital allocation. Our ability to deploy capital in high-growth markets, integrate at scale and deliver unique synergies through our connected portfolio is a key differentiator for our business. We recently announced the completion of our $8.5 billion acquisition of Arcosa, a significant investment, which will reinforce CRH as the leading aggregates and critical infrastructure player in North America.

We have also invested a further $1.9 billion in 27 value-accretive acquisitions in the year-to-date. And we have an attractive pipeline of further growth opportunities in front of us, supported by our unmatched scale, connected portfolio and proven growth capabilities.

During the quarter, we launched Velocity, a focused initiative to deliver an enhanced scalable operating model for CRH. Velocity will underpin our growth objectives and enhance operational efficiency, thereby delivering a structurally higher margin business. We expect Velocity to generate $400 million of annual adjusted EBITDA run rate benefits by the end of 2028, and I will take you through that in more detail later in the presentation. Looking ahead to 2027 and based on the visibility we have across our key markets, the outlook for our business is positive, supported by our strategic alignment to growing infrastructure mega trends.

Turning to Slide 5 and our financial highlights for the third quarter. Overall, we delivered a resilient performance despite subdued residential activity and a challenging cost environment. Total revenues of $11.4 billion were 3% ahead of the prior year, reflecting good underlying demand across our key markets, positive pricing momentum and contributions from acquisitions. We experienced significant cost inflation during the quarter as sustained increases in oil prices flowed through to key inputs, particularly energy, raw materials and haulage. In response, we implemented further commercial and operational actions to mitigate the impact.

This enabled us to deliver an adjusted EBITDA of $2.7 billion, in line with the prior year, representing a margin of approximately 24%. Our third quarter margin was 80 basis points behind the prior year, are in line, excluding the impact of some one-off gains in the prior year, which demonstrates the resiliency of our connected portfolio in an inflationary environment. All of this translated into diluted earnings per share pre impairment of $2.09, which includes the impact of transformation-related costs associated with Velocity.

Now at this point, I will ask Randy to take you through the performance of each of our businesses.

Randy Lake

Thanks, Jim, and hello, everyone. Turning to Slide 7 and starting with Americas Materials Solutions, which delivered a resilient performance despite subdued residential activity and input cost pressures. Total revenues and adjusted EBITDA were 6% and 1% ahead of the prior year, reflecting positive pricing momentum, contributions from acquisitions and the benefits of our connected portfolio.

In Essential Materials third quarter revenue were 19% ahead of the prior year. Our aggregates volumes increased by 2%, while pricing was 5% ahead or plus 6% on a mix adjusted basis. Cement volumes were in line with the prior year, while the pricing declined by an average of 2%. Our performance also reflects contributions from acquisitions, particularly Eco Material, which I'm pleased to report continues to perform well with volumes and pricing both up mid-single digits compared to the prior year period.

In Road Solutions, Q3 revenues were 2% ahead of the prior year, supported by growth in asphalt and ready-mixed concrete pricing. As Jim mentioned, we experienced some significant input cost inflation during the quarter, which impacted our margin performance, and we focused on cost recovery through further commercial actions and operational measures.

While housing activity remains muted, overall underlying demand remains supported by our exposure to growing infrastructure megatrends. Transportation continues to be underpinned by federal and state funding while reindustrialization activity is being fueled by large-scale manufacturing and data center investments. So overall, a solid performance for our Americas Materials Solutions business. And looking ahead, I'm encouraged by our backlogs, which are in line with the prior year.

Next to Americas Building Solutions on Slide 8, where our third quarter performance reflects the impact of divestitures, subdued residential activity as well as the non-recurrence of a prior year gain on the sale of certain land assets. We also experienced an inflationary cost backdrop, particularly in relation to elevated haulage rates and have now implemented ongoing operational and commercial initiatives to mitigate those costs.

In our Building & Infrastructure Solutions business, we continue to experience strong growth in data center, water and energy infrastructure markets. For Americas Building Solutions overall total revenues and adjusted EBITDA were 3% and 18% behind the prior year period. Excluding the impact of land sales, third quarter adjusted EBITDA and margin were ahead of the prior year.

Moving to International Solutions on Slide 9, where our business delivered further growth and margin expansion supported by increased activity levels in certain markets, positive pricing momentum and disciplined cost control. Total revenue growth of 1% translated into a 6% increase in adjusted EBITDA and a further 110 basis points of margin expansion. In Europe, demand remains underpinned by good infrastructure and reindustrialization activity. While in Australia, our business continues to benefit from positive underlying demand, operational efficiencies and contributions from acquisitions.

Jim Mintern

Thanks, Randy. And turning to Slide 10, reflecting our third quarter performance and expectations for the fourth quarter, we are updating our financial guidance for 2026 to reflect a softer residential market, inflationary cost backdrop as well as a partial year contribution from the Arcosa acquisition. Assuming normal weather patterns for the remainder of the year and no further major dislocations in the geopolitical or macroeconomic environment, we expect full year adjusted EBITDA to be between $7.8 billion and $8.0 billion, net income between $3.1 billion and $3.3 billion and adjusted diluted earnings per share between $5.37 and $5.59, representing another year of growth and value creation for CRH.

Now at this point, I would like to discuss the continued execution of our strategy. Since setting out our strategic road map and ambitious 2030 growth targets at our Investor Day last year, we have continued to strengthen our portfolio and increase our exposure to attractive markets aligned with growing infrastructure mega trends, transportation, water and reindustrialization. We have been proactively shaping our portfolio to capture secular growth, recycling capital into higher value strategic opportunities through acquisitions such as Arcosa, Eco Material and Axius Water, as well as completing over 60 value-accretive bolt-on acquisitions and $2.1 billion of divestitures.

Alongside portfolio strengthening, we are now evolving our operating model through Velocity, a focused transformation initiative that will underpin our growth objectives and enhance operational efficiency thereby delivering a structurally higher margin business, all powered by our winning way. Together, these actions will build a better CRH and support the next era of growth and long-term value creation for our shareholders.

First, I will ask Aylwyn to take you through our recent capital allocation activities.

Aylwyn Bryan

Thanks, Jim, and hello, everybody. Turning to Slide 13 and first to M&A, where year-to-date, we have invested $10.4 billion across our 4 connected growth platforms of aggregates, cementitious, roads and water. We completed our $8.5 billion acquisition of Arcosa ahead of schedule and invested a further $1.9 billion on 27 additional value-accretive acquisitions in the year-to-date.

Now withstanding an active year so far, we have a strong pipeline of further M&A opportunities in front of us, supported by our own match scale, connected portfolio and the fragmented nature of our industry. We have also completed three strategic divestitures of non-core businesses in the year-to-date for a total consideration of $1.9 billion, demonstrating our commitment to active portfolio management and the reallocation of capital into higher-growth connected businesses.

In addition, through our third quarter, we've invested $1.2 billion in growth CapEx, leveraging our size and scale to fully capitalize on high returning, low-risk investment opportunities to expand capacity in high-growth markets, improved operational efficiency, increase automation and optimize our energy use, all of which will deliver long-term shareholder value.

Turning to Slide 14 and to shareholder returns. Following completion of the Arcosa acquisition, we are pleased to announce a new $6 billion share buyback program, which will run to the end of 2030. The share buyback program we're announcing today is in line with the $40 billion capital allocation framework we set out as part of our Investor Day last year. In addition, in line with our policy of consistent long-term dividend growth, the Board has declared a quarterly dividend of $0.39 per share, representing an increase of 5% on prior year.

All of this is underpinned by the strength of our balance sheet and the significant financial capacity we have at our disposal. We remain committed to maintaining our strong investment-grade credit rating which we've held for over 20 years, and we expect our leverage ratio to normalize towards approximately 2x over time. So overall, these actions highlight our continued focus on disciplined capital allocation and delivering long-term value for our shareholders.

Jim Mintern

Thanks, Aylwyn. A good summary there of our recent capital allocation activities. Turning now to Slide 15 and our recent acquisition of Arcosa.

Arcosa comprises two infrastructure-related businesses, Construction Products and Engineered Structures. Construction Products is a high-quality connected aggregates-led materials business serving 13 of the 50 largest MSAs in the United States with leading positions in Texas, New Jersey, the Southeast and other high-growth regions. And with 35 million tons of annual high-quality aggregates, it will reinforce our position as the leader in U.S. aggregates with over 265 million tons of combined annualized production.

Engineered Structures is a leading U.S. manufacturer of critical infrastructure products in the high-growth energy transmission market. This business is supported by robust long-term demand underpinned by grid modernization, electrification and data center construction. Overall, the acquisition represents a compelling growth and value creation opportunity for CRH, and I will ask Randy to provide a brief overview of the strong synergy opportunities we have identified so far.

Randy Lake

For this acquisition, we're uniquely positioned to deliver significant value creation for shareholders, thanks to our proven ability to acquire and integrate at scale. As you can see on Slide 16, we currently expect approximately $175 million of run rate cost synergies to be achieved by year 3, with $60 million anticipated in the first year of ownership. We've identified significant opportunities across operations, integration and procurement, including production efficiencies, network and logistics optimization, increased material self-supply and the streamlining of administrative and support functions. We're delighted to have Arcosa as part of the CRH family and really looking forward to updating you on our progress.

Turning to Slide 17. Let me briefly take you through our combined energy and data portfolio with Arcosa now under our ownership. As you can see on the map, we now have an extensive nationwide manufacturing footprint across the United States, which will enhance our existing connected portfolio and expand our addressable market. It is highly complementary to our existing offering. By combining our leadership positions in energy distribution and data centers with Arcosa's strength and transmission, it will enhance our capabilities in the fast-growing U.S. energy infrastructure market.

It also deepen our relationships with leading utilities, hyperscalers and telecom carriers through our early engagement in the design and specification process, allowing us to deliver more tailored, high-value solutions for their specified needs. Overall, our combined energy and data portfolio represents a scaled, high-growth platform.

Jim Mintern

Thanks, Randy. I'm turning now to Slide 18. The outlook for this business is robust as reindustrialization continues to drive demand for power, grid and data center infrastructure. For example, as a result of the structural deficit and power supply, U.S. utilities are expected to invest approximately $1.4 trillion in grid infrastructure through 2030, representing the largest grid expansion and modernization in decades.

At the same time, the rapid growth of data centers is creating significant long-term demand for power and utility infrastructure with the North American data center pipeline now exceeding $2 trillion. As a result, transmission has become the fastest-growing segment of the energy market expected to grow at approximately 10% per year through 2030 as grid capacity continues to expand. Together with our leading market positions in nationwide coverage, we are well positioned to capitalize on the strong growth opportunity.

Now at this point, I would like to turn to Velocity on Slide 20. Velocity is a 2-year initiative focused on delivering an enhanced scalable operating model for CRH. At its core, Velocity streamlines our organizational structure, fostering greater agility and entrepreneurship across our business. By delayering decision-making, we will bring management closer to our customers and end markets, enabling faster decisions, more effective execution and greater economies of scale. Overall, Velocity underpins our growth objectives and enhances operational efficiency, thereby delivering a structurally higher margin business.

And moving to Slide 21, we have set out the expected benefits. Through simplifying organizational structures and processes, optimizing core business operations through technology, AI and data and accelerating decision-making, execution and the deployment of best practices, we expect Velocity to deliver annual adjusted EBITDA run rate benefits of approximately $400 million by the end of 2028.

Reflecting, among other factors, the opportunities identified through Velocity we are pleased to update our 2030 adjusted EBITDA margin target to the upper end of our previously guided range at approximately 24%.

With that, I'll ask Randy to take you through some of the key initiatives already underway across the business.

Randy Lake

First, simplification. We are restructuring and modernizing our organizational structure to achieve permanent cost efficiencies while also delayering management levels to accelerate decision-making. This will result in a more efficient and agile organization that is closer to the customer. Next, an example of optimization. Across our global asphalt plant network, we're leveraging real-time fuel management, mix analysis and enhanced monitoring capabilities to drive more data-driven decision-making. These initiatives are expected to deliver significant natural gas fuel savings of between 10% and 15%.

And finally, acceleration, rolling out a next-generation connected quarry platform across 42 of our largest quarries, each of which produced more than 1 million tons of aggregates annually. Supported by a data-led digital performance hub, the platform enables real-time optimization across the production process from mine planning and blasting through to crushing and low down, and is expected to deliver a 7% to 10% reduction in variable cost. These are just a few examples of the initiatives underway so far, demonstrating our ability to leverage technology, data and best practices at scale, to deliver improved performance. And we look forward to updating you on our progress as Velocity is fully deployed across our business.

Jim Mintern

Thanks, Randy. Now before I hand over to Q&A, I would like to take a moment to share our thoughts on some of the trends we are seeing across our markets as we look ahead to 2027. First, to the Americas and Transportation, where we continue to see a supportive backdrop underpinned by state and federal funding with approximately 40% of the AAJ funds yet to be deployed, highlighting the significant runway we still have ahead of us. While a multiyear reauthorization of highway funding remains outstanding, we believe we are headed in the right direction, supported by continued bipartisan momentum for increased infrastructure investment in the years ahead.

In reindustrialization, we expect continued strong demand for large-scale manufacturing and data centers. With a $2 trillion pipeline of data center projects either announced or under construction in North America and the benefits of our unmatched scale and connected customer offering, we are very well positioned to benefit in this area going forward.

We also expect to see continued investment in critical infrastructure, including water, energy and data investment. As for the residential sector, we expect activity to remain subdued in the near term as a result of the ongoing affordability challenges. And as we've said in the past, this is not a demand issue, and we believe the long-term fundamentals in this market remain very attractive, supported by favorable demographics and significant levels of underbuilt. In our international business, we expect positive momentum to continue across Western Europe, driven by good growth in Ireland, the Nordics and Spain, stability in the U.K. and France and some early signs of residential improvement in certain markets.

In Eastern Europe, our businesses are well positioned to benefit from a significant pipeline of infrastructure investments supported by EU funding programs. In Australia, the outlook also remains favorable, underpinned by the ongoing infrastructure activity and major project work. Regarding the pricing environment, we expect positive momentum to continue across our markets. So in summary, notwithstanding a subdued residential market, the overall trend is positive for our business heading into next year.

And turning now to Slide 25. CRH will enter 2027 from a position of strength. We are taking decisive actions to recover the impact of cost inflation that we have seen in the second half of the year, and expect the benefits of further commercial and operational initiatives to deliver positive price/cost spread in 2027.

We will also benefit from the full year contribution from Arcosa and the associated synergies. Through Velocity, we are focused on building a better CRH, evolving our operating model and raising our margin ambitions. We have announced a new $6 billion share buyback program to 2030, underpinned by our superior financial capacity and cash generation, and we continue to see a healthy pipeline of acquisition opportunities alongside continued portfolio optimization initiatives. Together, all of this supports delivering further growth and value creation for our shareholders and reinforcing our position as the leading compounder of capital in our industry.

So that concludes our presentation today. I will now hand you back to the moderator to coordinate the Q&A session of our call.

Operator

[Operator Instructions] Our first question comes from Angel Castillo with Morgan Stanley.

分析師問答

Angel Castillo Malpica

Jim, I was just hoping you could maybe talk a little bit more about the reasons for the kind of fiscal year '26 guidance cut. And maybe just kind of unpack a little bit more kind of the drivers, particularly maybe with the weakness in Americas Material Solutions. And as you think about kind of the range that you provided, just what would get you to the low end versus the high end of the guide.

Jim Mintern

Angel, yes, maybe I might ask Aylwyn to come back at the end, maybe just to comment on some of the puts and takes in the guidance we've reissued. The revised guidance this morning, Angel, really reflects the Q3 performance that we reported and also our estimates for the last quarter of the year. It's built in on what was a very strong first half, right, which -- I think showed the benefits and the resilience of the connected portfolio, and we actually delivered margin expansion through the Q2 and H1. However, since we entered July, we've seen a sharp and sustained increase in energy costs, particularly diesel. But also other costs, including haulage distribution.

We've also noticed and seen a residential demand has softened further across the U.S., and that's really, again, the backdrop of rising interest rates. So in broad terms, this guidance reflects the impacts from diesel, haulage, other related raw material costs and assumes in the Q forecast that we remain at these elevated levels of energy for the fourth quarter.

Now specifically on the question on American Materials, obviously, these impacts were most pronounced in the U.S. material business throughout Q3. Notwithstanding that, we delivered a solid underlying performance against what was a very challenging cost backdrop, from actually the low point of energy prices in kind of early mid to July, we've seen a sharp increase with diesel up 40% in a short period of time. And that has had a knock-on impact into other areas such as haulage.

Now for us, at this time of the year, it's difficult to recover that kind of cost inflation late in the year and also in what are some of our busiest activity months. I mentioned it also residential weakness was also a factor. Activity softened throughout the summer and impacted volumes across many of our markets. And we felt really the combined cost invasion and residential impact across all our products. We felt that across the AMS business in the quarter.

Now despite that, right, when you look at it, encouraged by the activity we see on the key infrastructure and non-res markets, our roads business is busy, and continues to perform really well, and we see good momentum in reindustrialization, particularly in the data center space.

Now what will be done to, I guess, address that inflationary cost backdrop. We're taking decisive actions, adding fuel surcharges and pushing pricing late in the season. And we see that in terms of our mix adjusted aggregates price was 6% up in the quarter.

I'm confident when we look across the business and across the group, our teams are executing well and get in the top of what is, in effect, a temporary timing issue. So we're well positioned heading into '27. Our backlogs are in good shape, and we expect a positive price/cost spread and a return to margin expansion in '27.

Maybe Aylwyn, do you want to comment on the...

Aylwyn Bryan

Angel, so maybe just a couple of comments on scope. As you'll be aware, it has been an active year in terms of M&A and investments for us. So with $10.4 billion of acquisitions year-to-date and $1.9 billion of divestments. So lots of puts and takes there, but we expect the overall net incremental contribution from acquisitions for the full year 2026 to be in the region of $300 million. Obviously, that includes the contribution from Arcosa for the final 2 months of the year in what is a seasonally quiet quarter for the business.

Other than that, as Jim mentioned, we are assuming energy constant at the current levels. And then, I guess, finally, in terms of the quarter in general, as you'll be aware, quarter 4 is a smaller quarter for us, and so it can be impacted by weather. If we get an early winter or vice versa, if we get a mild benign winter. So guidance assumes normal weather patterns.

Angel Castillo Malpica

Very helpful. And I know it's a little bit early here maybe into fiscal year '27, but just I wanted to touch on the comments you made about commercial actions or initiatives towards the end of the year to maybe try to recover some of this cost inflation into next year. So if you could comment maybe just -- as we think about the price that is required to ultimately recover this and return back to kind of price cost growth into next year? What kind of pricing actions should we be expecting across the aggregates and cement or realized price into next year?

Jim Mintern

Yes. Sure, angel. I'll maybe give a kind of bigger macro picture backdrop, and I might ask Randy, maybe just to comment specifically on some of the kind of assumptions and what we're thinking on volume and prices as we enter '27. Overall, if you look at it, the underlying demand backdrop is positive, right? And we got good pricing momentum as we're exiting 2026. So if you look at the building blocks, U.S. infrastructure remains positive, right? We have a continued resolution which is going to be in place in mid-December.

We've got good visibility on our backlogs and they're solid. And actually, the state and federal funding remains favorable. Actually, state tax receipts are up kind of mid-single digits in the first half of '26, right? And already, the kind of highway reauthorization conversations are underway, and we're exiting this year but about 40% of the AAJ still unspent. I touched on it. We're busy in the reindustrialization space and demand remains robust. We've got good backlogs, good visibility across a large multiyear projects, not just data centers, but complex manufacturing, chip plants, energy and LNG plants that gives us really good visibility, and I think we'll see continued growth in that space into 2027.

U.S. residential remains subdued. And we think that's going to be continued softening through '26. It's not a demand issue. It's an affordability issue. But the 30 year fixed now at 7.4%, we don't really see any res recovery probably until mid-2028 at best.

Maybe moving across the international business, there's a number of drivers for growth in 2027 across the international business. We've got very similar end to end market dynamics across all our international footprint. We got strong infrastructure demand across Western and Eastern Europe and Australia. Positive reindustrialization demand across our footprint, strong data center build-out across that footprint, but also particularly in Central and Eastern Europe, defense spending is notable, right, in terms of the activity levels across the eastern part of our portfolio. And we're seeing some signs of residential recovery in some of our key markets.

Now we're operating in an inflationary backdrop. And as we enter '27, we kind of think that we're looking at mid-single digits in terms of overall cost inflation. But maybe on volumes and prices, specifically, Randy, would you like to give color?

Randy Lake

Yes. I guess, just building on that. So I think you did a good job kind of laying out the overall demand environment, which continues to be pretty positive. Coming out of Q3, I think Jim mentioned it good pricing progression in aggregate 5%, total 6% on a mix-adjusted basis. As I look into next year and we get pretty good visibility, obviously, because of the backlog of our work. 2027 is going to be an exceptionally strong year in the aggregate side of the equation. Obviously, with a full year contribution of Arcosa that's going to bring about really a positive momentum there. I'd say more broadly, the market is probably flat to slightly positive in regards to demand.

But from a pricing standpoint, the expectation we have is for high single-digit pricing as we get into 2027. That work is already underway and beginning to make its way through the marketplace. I think just building on that, when you look at our cementitious portfolio, again, the demand drivers are in place. The visibility is good. We're looking at volumes up low single digits in the U.S. and pricing to follow in low single digits for the cementitious, which would be inclusive our Escrow business and the Eco Material business. So again, a strong contribution as we look into next year.

The international, Jim called that out as well. They're building off another strong year. You saw the performance in Q3. The demand environment is such that I think the volume expectations there for cement would be low single-digit volume growth and mid-single-digit pricing into '27 for our international cement business. So all in all, when you factor that in, the expectations for us to have margin expansion as we get into '27.

Operator

Your next question comes from the line of Trey Grooms with Stephens.

Trey Grooms

So I guess shifting gears a little bit to capital allocation with the recent closing of Arcosa, now the announcement of the new $6 billion share buyback program. Can you talk about your capital allocation priorities looking into '27? And on the buyback specifically, could you help us understand the expected cadence and timing of the buyback? How you expect to balance M&A with the buyback? And why now?

Jim Mintern

Trey, and I might ask Aylwyn maybe to come back to the specifics around the new $6 billion buyback that we announced this morning. But overall heading into '27, there's no real change in our capital allocation framework, right? We remain disciplined and value-focused and as we say, every capital allocation decision we make is look through that lens of maximizing shareholder value. This year has been a busy year, right, at $10.3 billion in terms of acquisition, 27 value-accretive deals, but also almost $2 billion of divestments, right? So a good year in terms of optimizing the portfolio.

Our M&A pipeline remains strong. We've got attractive opportunities across all our connected growth platforms, but we're going to remain disciplined in terms of valuations and returns. That healthy pipeline brings optionality, and with optionality comes disciplined, and that's very important for us. Our balance sheet level gives us flexibility. And just to put it in context, Trey, every $1 billion of kind of bolt-on deals is about 0.1x on our leverage as we enter '27. And maybe just to remind, we set out in our Capital Markets Day in 2025, we highlighted a $40 billion financial capacity through 2030, and we're allocating about 70% of that to the growth side of the equation and 30% in terms of shareholder returns.

Aylwyn Bryan

Trey, just following on from the completion of Arcosa, I guess we're also pleased to announce the multi near $6 billion share buyback, which will run through to the end of 2030. And as Jim outlined, that's fully aligned with the $40 billion capital allocation framework that we announced as part of last year's Capital Markets Day.

As well shareholder returns, obviously continues to be a really important part of the overall capital allocation priorities. And one commodity is the progressive dividend policy with over 40 years of growing dividend that we're very proud of. And in addition, to date, we've had a very successful share buyback program. We've retired close to 25% of our stock at an average price of just over $50. So a very, very successful program to date.

And buyback remains an efficient way for us to deploy capital. We believe our stock represents a clear value at these multiples, and does not represent the true potential of CRH. And so I guess in that context, we expect to be active in the market in the immediate future, and we'll update you as progress in terms of how we're doing as part of the Q4 results.

And then maybe just finally, if we step back, we remain committed to our investment-grade credit rating, which we've retained for over 20 years, and this is a really important part of our balance sheet strength. And saying that, CRH is a cash generation platform of scale. And so we continue to have capital available. And as Jim mentioned, we will continue to use that optionality to drive maximum value for our shareholders.

Operator

Your next question comes from the line of Adrian Huerta with JPMorgan.

Adrian Huerta

Jim, can you elaborate a bit more on this new Velocity program, I'm probably giving you additional details for examples, why now? And any additional color on implementing these cost initiatives and the phasing of the benefits?

Jim Mintern

Yes. Sure, Adrian. Good to hear you. Again, I might ask Aylwyn at the end just to come back in terms of size and velocity, the kind of run rate we're seeing and the cost implementation in '27 and into '28. But -- yes, it's been something that we've been working on for some time, Adrian. And it's underway and it's really something that's been enabled by the CRH winning way that we set out at last year's Capital Markets Day. .

Now on that day, I clearly set out our updated strategy and our vision and indeed our capital allocation priorities for CRH. And I think we've been really successful executing on that strategy over the last 12 months, right? We continue to work on optimizing our portfolio. As I mentioned, $2 billion of divestments and also recycling that capital into the likes of Arcosa, into Axius and Eco Material of last year. And I think you should expect us to continue to work on optimizing our portfolio as we enter into 2027.

Velocity is the next step, right? It was kind of a natural evolution of our making model. And what's it about? It's about building a better CRH, right? CRH is the leading and largest company in our space. And size matters, but it's actually it's scale that ultimately drives shareholder value, not size and it's that focus on scale. And Velocity maybe as well, just to clarify, is incremental to our 2030 targets we gave last September, and we're raising our ambition for the company across the entire group.

You kind of said why now, it's really the coming together of a number of factors, right? We've had a very active period of M&A over the last 2 years. We've also had the acquisition of Eco Material, Axius and now Arcosa. And as we planned and integrated those businesses, it really gave us, I guess, food for thought and acted as a catalyst for us to rethink our organization structure and also our operating model.

Those kind of events, together with really leveraging the latest technology is really what's enabled us to deliver the scale benefits. And the benefits are coming across a number of headings. Randy mentioned it earlier on the call, he just gave an overview of some of the projects that are already underway. But they're mainly coming from a combination of labor savings and efficiency and cost savings, right?

What we're doing is that we're simplifying delayering the organization, whilst critically retaining our unique entrepreneurial customer-focused mindset. By simplifying and delayering, we're actually -- we're bringing our senior managers closer to the frontline operators and crucially closer to the customer, and that's going to deliver quicker and more efficient decision-making. It's a group-wide initiative, one that's going to bring us, as we said, to the top end of our guidance in terms of margin for 2030, which is around 24%, and one that's really going to underpin the next era of growth for CRH.

Aylwyn Bryan

Yes. And then just in terms of the benefits and costs. So we're confident of delivering at least $400 million in terms of the annual run rate benefits by the end of 2028. And maybe just on phasing of that, we expect approximately 40% to be delivered in 2027 and then the balance by the end of 2028.

In order to deliver those $400 million of run rate benefits, as you'd expect, we will incur some onetime transformation costs in the region of $400 million as well, and approximately 2/3 of those costs will be incurred in H2 '26 and 2027, and then the final 1/3 across 2028.

Operator

Your next question comes from the line of Kathryn Thompson with Thompson Research Group.

Kathryn Thompson

Certainly, a lot of focus on higher energy cost and you outlined the impact with diesel. But looking forward, when you are planning forward, particularly heading into the winter months and given current elevated oil prices, how does this impact your winter fill program as you enter the purchasing season? How does that compare this year versus prior seasons? And strategically, how do you think about managing or expanding this program or your winter fill programs going forward?

Randy Lake

Yes. Maybe I'll take that. Good to hear from you. Maybe just taking a quick step back. The reason behind kind of this broad network of terminals across the U.S. is really around the surety of supply. We have the capacity to house about half of our yearly demand in our winter fill program. Critical element gives us a competitive advantage. Obviously, I mean, we're the -- as you know, the largest road paper in the U.S. north of 5x the #2 player. So it really offers a compelling competitive advantage, not just from the procurement side, but the ability to customize mixes in the marketplace.

So it's a critical element that we want to make sure we leverage that size and scale. When we came out of -- coming out of '26, it was a very successful business. We were able to secure product at good pricing and that made its way through the system.

When I look at the winter fill program in general, it begins typically in November runs through April. And as we saw coming, certainly you're well aware, in the summer, as we saw liquid costs kind of rising with the movement of oil, actually, something unique has happened as of late, right? The underlying demand and increase of output from the refiners to deal with the demand for diesel has created really a supply-demand imbalance, which is creating an opportunity for us.

So as I look going into the balance of this year, one, we'll get the product quantity that we need. And because of that scale and national reach of our terminaling network, we're going to be able to get a cost advantage. So when I look into 2027, it's going to be another year of margin progression. We're going to see profit improvement in that line of business as well as our asphalt line of business.

And then just building on your comment, I think that's something when you look at, and Aylwyn called it out in terms of the capital available to deploy at scale. The continuation of the expansion of our asphalt footprint in the U.S. will follow the expansion of our build-out of our asphalt network. So it's a critical enabler and one we continue to invest in. But fundamentally, as we look into '27, our margins will expand.

Operator

Your next question comes from the line of Colin Sheridan with Davy.

Colin Sheridan

My question is around Arcosa. I'm just wondering how your thinking has evolved around the company's Engineered Structures business and how you see it fitting in with the existing group businesses? And also whether or not there's been any divestitures or at point of note on the closure of that?

Jim Mintern

Colin, yes, listen, delighted to see Arcosa close at the end of last week. We're just getting our feet under the table at this point. Day 1 was just actually Monday of this week across all of the Arcosa operations. We obtained the regulatory approval kind of ahead of our expectations, timing-wise, with some very minor conditions, right, to divest a few asphalt plants, which were not material to the transaction, right?

What has done, Arcosa overall, when you look at it, has really strengthened our exposure to critical infrastructure and has significantly enhanced the quality of the portfolio.

You mentioned the Engineered Structures, right? It's actually the fastest-growing part of the Arcosa portfolio. And it's also going to be the fastest growing platform within CRH, and we expect kind of top line growth of double digits for the next 3 to 4 years, right? Right now, because of the demand and the build-out of the transmission network, we're looking at strong order backlogs with lead times out to 12 months across the engineered structured business in Arcosa.

And when combined with our existing activities that we have in this space, it significantly expands our energy and data offering, right? It's deepening our relationships with the utility customers that we're already working with and serving. It's creating a leading nationwide platform serving attractive growth markets linked to energy infra electrification and grid investment, right?

And it's also interesting in that 90% of the funding into this space is privately funded, right? More broadly, when you stand back and look at Arcosa in total, what it's done, it's strengthened our aggregates position and reaffirmed our leading aggregate position in the U.S. and it's expanding our critical infrastructure exposure. And it really, as we get into it and kind of early week 1, it gives really significant opportunities for us as we integrate the business into the wider CRH connected portfolio.

Operator

We have time for one more question, and that question comes from the line of David MacGregor with Longbow Research.

Unknown Analyst

This is Joe Nolan on for David. I just wanted to dig in a little bit more on the infrastructure outlook. With the U.S. midterm elections around the corner, can you provide an update on Highway Bill reauthorization and infrastructure funding backdrop as we head into 2027?

Randy Lake

Yes. Maybe I'll just kick off with that in terms of what we're seeing. I think first and Jim did a good job outlining what we see today, right? The current IIJ, 40% of that funding is yet to be deployed. So there's a tail as we called out in regards to that funding. I think probably an important element is the role, obviously, that states have played, they continue to play. They account for 60% of the underlying investment in the infrastructure. That's really been a flip over the last 10 years. I think the way that they focus on that, the way that they apply the resources to project has given them comfort in terms of outlook, and it's given us comfort as well.

If you -- for us, when we look at underlying activity, we look obviously at bidding on a weekly basis, and we see that on par with last year. So a continuation of the deployment of not only federal but state funding, we're winning our fair share. So our backlogs are a very similar position to where we were last year, which is encouraging.

There is a -- we're under a continuing resolution. I'd say that's more the norm than the exception. We've seen that with every piece of multiyear highway legislation dating back into the early '90s. So it's not an unusual position for us to be in. I think what's encouraging, though, is to continue bipartisan support in and around the need for investment in infrastructure.

And what we've seen come out of the house with the BA250 is encouraging, right? It's a return to kind of core infrastructure. It's a real focus on kind of permitting delays. It's creating better efficiency from the deployment of the capital in regards to the investments, and it's beginning to address a funding mechanism. So there's a lot to like in the BA250. We'll see what comes out of the Senate at the end of November. But overall, when we talk to people on Capitol Hill, there's alignment around the need for underlying investments. So when we look at the outlook for the year going into next year, we're very positive just based upon our backlogs and the underlying bidding activity.

Jim Mintern

Yes. Thanks, Randy. And maybe just to build on that, right? So if we step back for a moment, I think as we enter into '27, the broader outlook remains positive, right? Infrastructure is strong, and our backlogs are supportive. Our reindustrialization, we called it out continues to drive significant project activity, and we see good momentum carrying into 2027.

Residential is expected to remain subdued, particularly in the U.S. And the pricing backdrop heading into 2027 is supportive, right?

When you stem back overall, looking into '27, CRH is in good shape, right? Our Arcosa deal is closed. So we have a full 12 months clean contribution from Arcosa. Velocity is underway and is already delivering benefits, which is going to underpin our future growth. We're building a better CRH, one that's going to have structurally higher margins. We're pleased today to announce the recommencement of our new $6 billion share buyback program. Now but as we enter 2027, our focus is really about execution on our strategy, execution and Velocity, integrating Arcosa and delivering on the synergies, right? So putting it all together, I'm confident that the building blocks are in place to deliver another year of growth as we enter into 2027.

Well, that's all we have time for today. Thank you for all your attention. And as always, if you have any follow-up questions, please feel free to contact our Investor Relations team. We look forward to talking to you again in February next year when we will report our full year results for 2026. Thank you. Have a good day, and stay safe.

Operator

Thank you. Your conference call has now ended, and you may now disconnect.