CRH Q1 2024 TU Earnings Call Transcript

Quartr
Provided by Quartr
May 10, 2024

Key Takeaways

  • Q1 Financial Performance: Revenues rose 2% to $6.5 B and adjusted EBITDA climbed 15% to $445 M with an 80 bp margin uplift, allowing CRH to reaffirm full-year EBITDA guidance of $6.55–6.85 B.
  • Major Acquisitions and Synergies: CRH closed a $2.1 B Texas cement and ready-mix deal, added Northern California assets, proposed a majority acquisition of Adbri in Australia, and identified $60 M of run-rate synergies by year three.
  • Shareholder Returns: The company has repurchased $600 M of shares year-to-date, announced an additional $300 M buyback tranche, and raised its quarterly dividend by 5% to $0.35 per share.
  • North America Outlook: Demand is underpinned by federal and state infrastructure funding (IIJA, IRA, Chips Act) and non-residential onshoring investment, while newbuild residential remains subdued.
  • European Business Mix: Europe Materials saw 32% EBITDA growth in Q1 from cost control and lower energy costs, whereas Europe Building Solutions faced weather headwinds and weak residential activity.
AI Generated. May Contain Errors.
Earnings Conference Call
CRH Q1 2024 TU
00:00 / 00:00

There are 12 speakers on the call.

Operator

Good day, and welcome to the CRH Plc First Quarter 2024 Results Presentation. My name is Christia, and I will be your operator today. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer At this time, I'd like to turn the conference over to Albert Manifold, CRH Chief Executive Officer to begin the conference. Please go ahead, sir.

Speaker 1

Hello, everyone. Albert Manafort here, CRH Group Chief Executive, and you're all very welcome to our quarter 1 2024 results presentation and conference call. Joining me on the call is Jim Mintern, our Group CFO Randy Lake, Chief Operating Officer and Tom Holmes, Head of Investor Relations. Before we get started, I'll hand you over to Tom for

Speaker 2

some brief opening remarks. Thanks, Albert. Hello, everyone. Before we begin today's proceedings, I'd like to draw your attention to slide 1 shown here on screen. During today's presentation, we will be making some forward looking statements relating to our future plans and expectations.

Speaker 2

These are subject to certain risks and uncertainties, and actual results and outcomes could differ materially due to the factors outlined on this slide. For more details, please refer to this slide, our Annual Report, and other SEC filings, which are available on our website. I will now hand over to Albert, Jim and Randy to deliver some prepared remarks. After that, we will open the line for a Q and A session.

Speaker 1

Thanks, Tom. Over the next 20 minutes or so, we'll take you through a brief presentation of the results we've published this morning, highlighting the key drivers of our operating performance for the 1st 3 months of the year, our recent capital allocation and development activities, as well as providing you with an update on our expectations for the year as a whole. Afterwards, we'll be available to take any questions that you may have and all told, we should be done in about 40 minutes or so. 1st, on slide 3, some key messages from today's results. Overall, it's been a good start to the year in what is the seasonally least significant quarter for our business.

Speaker 1

Further growth in revenues, adjusted EBITDA and margin compared to the prior year period continues to be underpinned by the benefits of our integrated solutions strategy as well as positive pricing momentum, early season project activity and benign weather conditions in some key markets. Notwithstanding the good start to the year, it's still very early in the construction season and we're pleased to reaffirm our previous guidance to the market for 2024. Assuming normal seasonal weather patterns and no major dislocations in the macroeconomic environment, we expect full year group adjusted EBITDA to be between $6,550,000,000 $6,850,000,000 which would represent another strong year of delivery for CRH. As most of you know, we've been very active on the acquisition front in recent months, increasing our exposure to attractive high growth markets and strategically developing our solutions capabilities to deliver further value for our customers and our shareholders. In February, we completed the $2,100,000,000 acquisition of our portfolio of cement and ready mixed concrete assets and operations in Texas, a significant investment which will further strengthen our position as the number one building materials business in the fastest growing state in the United States.

Speaker 1

So far we've identified run rate synergies of approximately $60,000,000 and Rani will take you through that in more detail a little later. In April, we acquired a materials business in Northern California representing an attractive entry point into this market for our Americas Materials Solutions businesses due to a substantial aggregate reserves and vertically integrated asphalt and ready mixed concrete operations. We recently announced a proposal to acquire a majority stake in Adbri, a leading provider of building materials in Australia. And we expect that transaction to close in 2024 subject to regulatory and Adbri independent shareholder approval. The strength of our balance sheet also enables us to continue to return significant amounts of cash to our shareholders.

Speaker 1

Our ongoing share buyback program has returned approximately $600,000,000 so far this year. And today, we're announcing a further quarterly tranche of $300,000,000 representing an annual run rate of approximately $1,200,000,000 Following our transition to quarterly dividend payments, the Board has declared a new quarterly dividend of $0.35 per share representing an annualized increase of 5% on the prior year in line with our strong financial position and policy of consistent long term dividend growth. Turning to Slide 4 and our financial highlights for the 1st 3 months of the year. Overall, a good performance across all key metrics with revenues, adjusted EBITDA, margin and EPS all ahead of the prior year period. Total revenues of $6,500,000,000 were 2% ahead.

Speaker 1

This translated into adjusted EBITDA of $445,000,000 15% ahead and a further 80 basis points of margin improvement, reflecting the continued benefits of our integrated solutions strategy, disciplined cost control and further operational efficiencies. Now at this point, I'll hand you over to Randy to take you through the operating performance of each of our businesses.

Speaker 3

Thanks, Albert. Hello, everyone. Turning to Slide 6 and starting with America Materials Solutions, which had a good start to the year supported by positive pricing across all lines of business, favorable weather in certain key markets and contributions from acquisitions. All of this resulted in total revenue 16% ahead of the prior year period. In essential materials, Q1 revenues were 12% ahead of the prior year with good activity levels in the West and Great Lake region of the United States.

Speaker 3

Our aggregates pricing increased by 8% despite being adversely impacted by geographic mix, while our cement pricing increased by 9%. In Road Solutions, good demand together with further price progression in asphalt and ready mix concrete resulted in Q1 revenues 19% ahead of the prior year period. Of course, it's worth noting that Americas Material Solutions is particularly seasonal, and the Q1 typically only accounts for between 10% and 15% of our annual volumes. Combined with the timing of our annual maintenance programs, you can also see how seasonally insignificant this period is from an adjusted EBITDA and margin perspective. As Albert mentioned, we recently completed our acquisition of a portfolio of cement and ready mix concrete assets in Texas.

Speaker 3

Our focus now is on integrating these assets into our existing business and delivering on the synergies and growth opportunities that we've identified. And I'm pleased to report that the early integration is progressing well and in line with our expectations. Turning to our end markets and first to infrastructure, which represents our largest exposure in North America. Here the funding backdrop is robust with demand underpinned by the significant increase in U. S.

Speaker 3

Federal funding through the IIJA as well as positive momentum in transportation funding initiatives at the state level. We also continue to experience good demand in the industrial and manufacturing sectors which are also supported by significant federal funding and increased onshoring activity. Looking ahead, as the construction season gets fully underway across many of our markets, I'm encouraged by the momentum we're seeing in our bidding activity and our backlogs, which reflects the significant increase in U. S. Infrastructure funds that are now coming through.

Speaker 3

Next to America's Building Solutions on Slide 7, which has also experienced a good start to the year benefiting from positive pricing, cost control and good delivery from recent acquisitions. Notwithstanding some unfavorable weather conditions and subdued new build residential demand impacting activity levels during the Q1, Our Building and Infrastructure Solutions business continues to benefit from significant public investment in critical utility infrastructure. Outdoor living solutions had a good start to the year with Q1 revenues 5% ahead driven by good early season demand in both the retail and professional channels and resilient residential repair and remodel activity. For America's Building Solutions overall, total revenue growth of 2% translated into a 2% increase in adjusted EBITDA and a further 10 basis points of margin improvement. Moving across to Europe now on Slide 8 and first to the performance of Europe Material Solutions.

Speaker 3

Despite record rainfall impacting activity levels across several key markets in Western Europe during the Q1, our business delivered a strong performance with adjusted EBITDA 32% ahead of the prior year. This was driven by further growth in our Central and Eastern European markets, good commercial management, lower energy costs and our ongoing focus on cost management and operational efficiencies. While residential demand remains subdued, infrastructure and non residential segments continued to be underpinned by government and EU funding programs. Our first quarter results also reflect the divestiture of Phase 1 and 2 of our European lime operations. The final phase consisting of our lime operations in Poland is expected to complete in the second half of 2024.

Speaker 3

Next to the performance of Europe Building Solutions on Slide 9. This is our smallest business representing less than 5% of group adjusted EBITDA in 2023 and it's much more exposed to residential new build construction than the rest of our businesses. Overall, a challenging start to the year impacted by subdued residential activity and compounded by adverse weather conditions across our markets. We continue to focus on cost management and operational efficiencies to mitigate the impact of lower activity levels as well as maintaining positive pricing momentum to protect our profitability. And so at this point, I'll hand you over to Jim to take you through our financial performance in further detail.

Speaker 4

Thanks, Randy, and hello, everyone. As you heard from Albert earlier, we've had a good start to the year, and this is reflected in our financial performance as outlined on Slide 11. Let me briefly take you through the main drivers of our adjusted EBITDA performance moving from left to right on the slide. Starting with organic growth of $47,000,000 at 12% ahead on a like for like basis, reflecting good underlying demand in our key markets, further pricing progress amid an inflationary input cost environment and the continued benefits of our differentiated strategy. Acquisitions, net of divestitures, delivered a further $11,000,000 of adjusted EBITDA, primarily reflecting the contribution from our acquisition of material assets in Texas and the impact of the divestiture of Phases 12 of our European line operations.

Speaker 4

Overall, we delivered $445,000,000 of adjusted EBITDA, 15% ahead of the prior year period and representing a good start to the year in what is our seasonally least significant period. Next to Slide 12, where I will just take a moment to highlight some of the key components of our net debt movements and our strong and flexible balance sheet. Firstly, on the left hand side, you can see we ended 2023 with a net debt position of $5,400,000,000 Turning to our cash flow performance. We reported a net cash flow outflow of approximately $700,000,000 in the first quarter. An outflow at this stage of the year is to be expected given the seasonal nature of our business as it reflects the buildup in working capital in advance of 2nd and third quarter trading, which are seasonally our most important trading periods.

Speaker 4

Acquisitions net of divestitures and other items resulted in an outflow of approximately $1,900,000,000 during the 1st 3 months of 2024, primarily reflecting the acquisition of material assets in Texas and the proceeds from the divestiture of the initial phases of our European line operations. We also invested $500,000,000 in capital expenditure to support further growth in our existing business. And we returned $1,100,000,000 in the form of dividends and share buybacks, demonstrating our commitment to returning cash to our shareholders. Taking all of this into account results in a net debt position of $9,600,000,000 at the end of the Q1, representing a net debt to adjusted EBITDA ratio of approximately 1.5 times on a trailing 12 months basis. Now at this stage, we would like to briefly update you on a few other items from today's announcement.

Speaker 4

Active portfolio management is a continuous process in CRH and we are constantly allocating and reallocating our capital to create value for our shareholders. As you can see here on Slide 14, we have been very active in this regard so far this year. In addition to the divestiture of the initial phases of our European line operations, in April, we also completed the divestiture of certain cement and material assets in Canada. On the acquisition front, in addition to the completion of the material asset acquisitions in Texas in February, we entered into a binding agreement to acquire a majority stake in Adbri, a leading provider of building materials in Australia. Adbri has high quality assets and leading market positions that complement our core competencies in cement, concrete and aggregates while creating additional opportunities for growth and development for our existing Australian businesses.

Speaker 4

The proposed transaction is subject to regulatory and Adbri shareholder approval and is expected to complete in 2024. In April, we acquired Bodine, a material solutions business including 2 hard rock quarries in California. This represents an attractive first entry point into California for our Americas Materials Solutions business, particularly due to its substantial hard rock reserves and vertically integrated asphalt and ready mixed concrete operations. We also invested approximately $100,000,000 on 7 strategic bolt on acquisitions, further developing our integrated solution strategy in the areas of road infrastructure, critical utility infrastructure and outdoor living. All of this activity represents our commitment to allocating and reallocating capital into attractive high growth markets and areas where we can further develop our integrated solution strategy.

Speaker 4

Now at this point, I'll hand over to Randy to update you on the synergies we have identified following the completion of our CAD 2,100,000,000 acquisition of material assets in Texas.

Speaker 3

Thanks, Jim. I'm pleased to report that we've identified approximately $60,000,000 of run rate synergies, which we expect to be achieved by year 3. And on the right hand side of Slide 15, we've outlined the expected phasing with approximately $15,000,000 anticipated in the 1st year. There are significant benefits that arise from integrating these assets into CRH. They're an excellent strategic fit with our existing operations in Texas.

Speaker 3

And as a result, there are significant opportunities to self supply our own downstream solutions businesses. It will also be very beneficial from a network optimization point of view. It will allow us to be much more efficient in how we manage our materials flow, our logistics and how we service our customers across our wider regional footprint. We've also identified significant synergies from operational improvements, leveraging our expertise and technical capabilities from our wider North America cement platform and Europe Materials businesses to optimize plant performance and improve production efficiencies through increased usage of alternative fuels and raw materials. There are also savings to be generated by integrating these assets into our global procurement network, leveraging our scale, purchasing power and supply arrangements for materials, equipment and services.

Speaker 3

So in summary, the early integration is progressing well and we look forward to updating you on our progress.

Speaker 1

Thanks, Randy. Great examples there of some of the real and tangible benefits and value creation opportunities that we see under our ownership. Now before I provide you with an update on our expectations for the full year, let me share our thoughts on the outlook across our markets. Turning to Slide 17. North America represents 75% of our adjusted EBITDA with the remaining 25% in Europe.

Speaker 1

First, the infrastructure, which represents the largest exposure for our business. Here, the outlook is robust with demand in the United States underpinned by the continued rollout of once in a generation federal and state investment. Similarly in Europe, we expect robust demand in infrastructure activity to continue, supported by significant investment from government and EU funding programs. In non residential, we expect key segments to continue to benefit from increased re industrialization and on shoring activity. In the United States, this is supported by $650,000,000,000 of federal funding for increased investment in clean energy, critical utilities and high-tech manufacturing following the passing of the Inflation Reduction Act and the Chips and Science Act.

Speaker 1

Europe is also benefiting from increased onshore activity with over $200,000,000,000 of high-tech manufacturing projects in the pipeline. In the residential segment, we expect new build activity in the U. S. And Europe to remain subdued due to the affordability challenges caused by the current This is not a demand issue and we believe the long term fundamentals for residential construction remain very attractive in these markets, supported by favorable demographics and significant levels of underbuild. So in summary, the overall trend is positive for our business, supported by robust demand in infrastructure and key non residential segments, while newbuild residential construction is expected to remain subdued.

Speaker 1

Regarding the pricing environment, we expect positive momentum to continue across our markets, supported by disciplined commercial management as well as the benefits of our integrated and value focused solution strategy. Turning to Slide 18, and against that backdrop, this morning we have reaffirmed our financial guidance for 2024. Assuming normal weather patterns for the remainder of the year and no major dislocations in the macroeconomic environment, we expect full year group adjusted EBITDA to be between 6.55 $6,850,000,000 net income to be between $3,550,000,000 and 3,800,000,000 and earnings per share between $5.15 $5.45 representing another strong year of delivery for CRH. It's still very early in the construction season, but we will of course update you on our expectations as the year unfolds and the season gets fully underway across our markets. So that concludes our presentation today.

Speaker 1

I'm now happy to take your questions. May I ask you please to state your name and the institution that you represent before posing your questions. I'll now hand you back to the moderator to coordinate the Q and A session of our call.

Operator

Thank you. Your first question comes from the line of Anthony Pettinari Pettinari from Citi. Please go ahead.

Speaker 5

Good morning. I was wondering if you could talk about pricing dynamics and price cost in Americas Materials. And are you still seeing or guiding to double digits for the year on pricing?

Speaker 3

Yes, Anthony, thanks for the question. Q1 in terms of aggregate pricing was up 8%, I think a bit impacted by the geographic mix and seasonality that's associated just with the platform of businesses we have, so good progress there. If you look on a mix adjusted basis, pricing was up double digits, which is really consistent with what we indicated at the beginning of the year. So there's really strong support, good momentum in terms of underlying pricing in ag and cement as well. So we're happy with the progress we've seen in terms of cement, up 9% across the group, again supported by good underlying demand.

Speaker 5

Okay, that's helpful. And then just with Hunter, can you talk about maybe the current kind of state of cement pricing in Texas? And are you seeing any weakness there maybe in the southern part of the state that see some imports or how would you characterize the Texas cement?

Speaker 3

I guess I would characterize it very similar to what we're seeing across the nation. So good support for pricing. We're really seeing no concerns in Texas. Q1 certainly was impacted by weather. So we take that into consideration, but we expect positive pricing as we go throughout 2024.

Speaker 3

But I call out Texas not just cement, I think it's ags, it's asphalt, it's ready mix concrete, it's really all of the downstream business as well. So we see good support and expect progress in 2024.

Speaker 5

Okay, that's helpful. I'll turn it over.

Operator

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

Speaker 6

Hi. Thank you for taking my questions today. First is just on the outlook. You had stronger than expected volumes in the U. S.

Speaker 6

Market. Could you give a little bit more color in terms of how much of that is fundamental demand versus favorable weather or other factors? And then along with that backlog trends for the year and color on that. Thank you.

Speaker 3

Yes. Appreciate that question. I guess it's probably a mix of both. Certainly, weather for us was favorable in I think we called out the Great Lakes region, kind of the Michigan, Ohio area. So good demand there, probably helped by weather, but also some significant projects that we've had in our backlog and able to execute on.

Speaker 3

Out west, specifically kind of Utah and Idaho, again, pretty favorable weather. I think it's important to remember kind of in total terms, the absolute volume shipped are pretty low in terms of overall percentages for the year, it's less than 10% of our total material or aggregate shipments. But again, it's supported though, and I guess to your question on backlogs, it's good to have that early momentum and it reflects what we have in our backlogs today. So you see both federal and state funding initiatives coming through in terms of underlying bid activities. We're getting our share of those businesses and actually margins are up in all lines of business, which is good to see.

Speaker 3

I would call out both the roads business, but also the critical infrastructure. We often don't talk about kind of the underground utility work that's associated with roads and both our businesses, the backlogs there would reflect good underlying demand.

Speaker 6

Okay, great. And one follow-up question related to Texas and Cement. Some of our primary research has pointed to a shortage of fly ash due to issues with a supplier recently, which conversely could be a net positive for your cement business. Stepping back and looking at the bigger picture as you have coal fired plants in the U. S.

Speaker 6

Phased out and tightening the supply of fly ash. What does this mean for CRH's business, not just for this year, but when you look a few years out? Thanks very much.

Speaker 3

It's a good question. We've been proactive in terms of the use We have We have the capabilities, 1, to blend, 2, to integrate for our customers, but 3, more importantly, the access to it. So whether those are ports, the ability to kind of consume and then transport to our major markets, I think we're well positioned to deal with what is certainly a shortage in fly ash, but good alternatives in terms of overall product mix.

Speaker 1

And I should say as well, around the across, we have a decade of capability in our European businesses in dealing with this issue in terms of blending and technology as well. So that's a big advantage to us as it rolls out here in the U. S. At the current time.

Speaker 6

Perfect. Thanks very much.

Operator

Your next question comes from Ross Harvey with Davy. Please go ahead.

Speaker 7

Thanks very much and thanks for taking my question. I'm hoping you can elaborate on the guidance, maybe the pluses and minuses that you see in relation to the 2024 guidance. I know you've reaffirmed this today, just a good strong Q1 performance in there, new synergies, further M and A. Can you

Speaker 8

just elaborate on that? Thanks.

Speaker 4

Good morning. Jim here. It's been a good start to the year, but it's still very early in the season for us, Ross. And since we issued the guidance at the end of February, we've been active on M and A. We've had 8 bolt ons year to date, including the attractive entry into the California materials with the Bodine acquisition.

Speaker 4

We've also announced this morning the Texas synergies. So that's a €60,000,000 synergies by year 3 €15,000,000 in the current year 2024. However, the kind of contributions from the bolt ons and the Texas synergies are largely offset by the divestment of the cement and material assets that we announced in Quebec, which closed on the 1st April. So overall, when you put them together, the kind of pluses and minuses, there's not that much of a difference from kind of $70,000,000 to $80,000,000 we set out on the end of February in terms of the contribution from bolt ons in 'twenty four. But just to confirm, that doesn't include any contribution potentially from the closure of the Adbri acquisition in Australia.

Speaker 4

So overall, pluses and minuses. It's a good start to the year, and we're happy to be able to reaffirm this morning our guidance for the full year.

Speaker 1

Ross, it's Albert here. Look, I know there's an incredible focus on the 1st 3 months of the year, but but it literally is a short snapshot. And let's just take a step back here. Look, for sure, we've had a good start to the year. And as we look here, as Randy mentioned, backlogs, look, take us through first half of the year, looks strong and continues to be strong.

Speaker 1

So we're in a good place and happy to be that. But let's just take a step back here. Look, we are at the early stages of a major growth cycle for our our industry, but backed by unprecedented government support for both infrastructure spend both in the United States and indeed in Europe. On top of that, we're seeing again very significant levels of reassuring and non shoring investment that's going to drive demand for the commercial sector. So honestly, as I look forward the next 5, 6, 7 years, I know we're talking about 1 quarter results today.

Speaker 1

We're looking pretty good as an industry all the way to the end of the decade. So the short term, the medium term and the long term outlook all look very positive for CRH. Now against that backdrop, I know you want to talk about the 1st 3 months of the year, but our focus in this business is on 3 main areas. Of course, number 1, it's an execution of our operational performance. Every day, we work at that, delivering performance in terms of profitability cash.

Speaker 1

Number 2, I think it's crucially important now at the start of this major growth cycle is to invest in our businesses, investing for the next growth cycle. And number 3, as you expect from Suresh, to continue to be disciplined stewards of capital. We talk about how over the next 5 years we will generate $35,000,000,000 of free cash flow. And this year you're starting to see what we're doing with that. I expect us to spend close to $4,000,000,000 on M and A in this year with deals announced or deals already in the pipeline.

Speaker 1

On top of that, we're going to spend about another $1,000,000,000 in growth CapEx. That's $5,000,000,000 invested in the growth of our business for 2,030 and beyond. In addition to that, with buybacks announced, the run rate we're looking at and dividends, it's likely we will distribute a further $3,000,000,000 back to our shareholders with dividends and share buybacks. So a very significant investment in the 1st year of that $35,000,000,000 that we're seeing there. The industry backdrop is good.

Speaker 1

We are the number one player in the United States and Europe. Therefore, we will be the major beneficiary in this growth cycle and no one else can touch our cash generation. And particularly when we use that cash to drive performance for further growth and rewarding our shareholders. And again, we talked about the Q1, but let's just take a step back and look at the short to medium term growth cycle and see where we are. And I think Sea Ridge positions itself very well for that.

Operator

Your next question comes from the line of Michael Dudas with Vertical Research Partners. Please go ahead.

Speaker 9

Good afternoon, gentlemen.

Speaker 5

Hello? Can you hear me?

Speaker 1

Yes, we hear you, Mike. Go ahead, please. Go ahead.

Speaker 9

Okay, great. Thank you. Sorry about that. Yes, thank you. First, just quick, I know you gave a lot of details on the Texas acquisition.

Speaker 9

Relative to what you saw going into negotiations and what you've seen early on and relative to your playbook, are you at, behind or ahead of schedule relative to some obviously you put out some pretty interesting synergy targets. Maybe you can just share some thoughts on that first?

Speaker 3

Yes, happy to. Well, I think we're satisfied so far. We've identified $60,000,000 at this point in time. We'll continue to dig in. But I think there's a couple of things maybe to call out and we did a bit in the presentation.

Speaker 3

We are the largest building materials supplier in the State of Texas. We have a really unique portfolio of businesses, downstream consumers of cement, whether that's the ready mix business, our critical infrastructure or the outdoor living. So, just that internal consumption is a big value creator for us. But when you look at the context of that plant, along with our other plant in Midlothian, Texas, our assets in Arkansas as well as Kansas, kind of that network optimization is a huge benefit from a transportation standpoint and the ability to serve that market in the way it needs to be served as it continues to grow. So those are that's a nice pool of opportunity for us.

Speaker 3

I think the other bit, which we called out in the past, I think is important to say is that, it's a great example of Ash Grove is probably the best, most tangible example. In 2018, acquired that business and have doubled the profitability in 6 years. That was driven by the usage of internal resources to drive operational performance. So being a leading producer of cement, 40 plus plants around the world, optimizing, taking our best practices, applying those in terms of the plant in Hunter is another large pool of opportunity. And so we've clearly identified opportunity there.

Speaker 3

And then the last is kind of the housekeeping you would expect to do in and around procurement and kind of weaving them into our underlying platform in terms of leveraging our size and scale. So as I said, it's a good look at it and as of today, dollars 60,000,000 of opportunity so far.

Speaker 1

I should say, Mike, just to add to what Randy just said. I mean, Randy should talk, it's €60,000,000 at this point in time. We're on our feet are just under the table there. We'll see how it goes. But again, it's worthwhile asking how do we do this?

Speaker 1

Well, CRH, the new owner of this business, brings technical capabilities and it brings a solutions model and that's what delivers the extra profitability. So as compared to previous owners, we're going to increase the profit of this business by over 30%. And it's done because we have technical capability, but we integrated into our solutions model, a model that now shows you versus previous owners who are dedicated focused materials players, the solutions model, it delivers higher profitability. It will deliver those profitable translation to higher cash and better returns. That's the advantage of investing and working with CRH in companies like this.

Speaker 1

And again, it must be seen against the backdrop of our constant portfolio management. During the course of the last 12 months, we disposed of maybe slow growth businesses and line businesses in Europe. We disposed of the business in Quebec. That money has been reinvested into the faster growing regions of Western Texas in and around this plant here. And again, that's what you should expect to see as efficient, disciplined stewards of capital.

Speaker 9

Well, that's a great segment. And my follow-up is maybe Albert, you could or gentlemen, you can elaborate on your current visibility on the M and A pipeline and some of the valuations you're experiencing in your negotiations.

Speaker 1

Look, valuations have always been too high in my 25 some years in CRH and they continue to be

Speaker 10

too high,

Speaker 1

except what we do is, but when we deliver synergies like we deliver for synergies, that's how we pay those high prices and we deliver shareholders' returns. Our pipeline is strong. I already said earlier in this call that I expect us to do about $4,000,000,000 worth of deals this year between what's announced and what's coming. We will digest those deals. We'll obviously integrate them, create those synergies and move on to next year after that.

Speaker 1

So the pipeline is good and strong. Happy that it's continuing to build out our footprint. And I think the portfolio management will continue as we continue to reallocate capital back into the high growth parts of our solutions model.

Speaker 5

Thank you, gentlemen.

Operator

Your next question comes from the line of Brent Thielman with D. A. Davidson. Please go ahead.

Speaker 7

Great. Thank you. I guess my first question would just be if you could provide an update on the timing of U. S. Index inclusion?

Speaker 4

Morning, Brent. Yes, firstly, there's several key equity indices in the U. S, right, JUV S and P, Russell, CRISP, MSCI, and they all have different eligibility criteria and rebalancing timelines. Since the relisting last September, we're very pleased with the progress we've made to date. In fact, today, the NYSE represents over 80% of our daily trading volumes.

Speaker 4

And also today, the majority of our shareholders are now based in the U. S. For us, the filing of our 10 ks and our U. S. GAAP financials in February was also a key kind of important milestone for us.

Speaker 4

But ultimately, inclusion is at the discretion of the individual index providers. But we're confident that we're eligible for consideration and of course, we'll be seeking inclusion as soon as possible.

Speaker 7

Okay, I appreciate that. And then my follow-up would just be on America's Building Solutions. You mentioned good early season demand trends in outdoor living. I'm wondering how that might inform your view for the first half or rest of the year for that group in particular just in terms of organic growth potential this year?

Speaker 1

I have to say, I think there's one particular division within our Americas Billing Solution, which for me has always been the Canadian coal mine, which is our outdoor living business because it's the early season sell in, the spring season sell in for outdoor living business. And it gives you a good sense of what the underlying demand is for the small jobbing contractors across the United States, which is a good bedrock. And I have to say the seasonal demand has been better than we expected. Volume levels are ahead. Activity levels are strong.

Speaker 1

Sell through numbers are still strong. I saw the numbers last week again continue to be strong. The order books are good. So I'm positively pleased with the development there, it's a good sign as we start to ramp up for the busy part of our season now.

Speaker 7

Okay, great. Thank you.

Speaker 1

Thanks, Mike.

Operator

Your next question comes from the line of Keith Hughes with Truist. Please go ahead.

Speaker 7

Thank you. I agree with your comment, Albert, of that being a canary in a coal mine. Can you just speak a little more on specifically what products in Americas Outdoors that are doing well and leading the charge here?

Speaker 1

The question was, I used the term Canary in the coal mine for outdoor living and what products am I specifically talking about? Actually, it's a wide range of bollocks, mainly our hardscapes and paving products that are used in building at the backyard. Usually what happens as we come out of the winter season, early spring season, people are prepared to spend time, effort and energy preparing their outdoor living areas for the summer season. So it tends to be those hardscape areas, concrete pavers, bricks, hardscapes, all of that walls, capstones, all of that. That's where the demand comes from as people prepare for the season.

Speaker 1

And it really indicates the level of activity that people are prepared to invest in their homes. So we have always found that to be a good indication of the underlying demand and confidence for people to spend in this environment. And that's where we're calling it from. And we haven't been proved wrong yet in the 25 years we've really had a strong business in this area.

Operator

Your next question comes from the line of Will Jones from Redburn Atlantic. Please go ahead.

Speaker 8

Thanks. Good morning. Can I just ask around the asphalt and paving elements of Americas Materials, please? Perhaps you could just update us on the winter fill program you come out of that now and how that went and how you feel it leaves you with regard to what you need on price over the summer season. And then linked about, I guess, the paving revenues.

Speaker 8

I think 20% or so growth. I appreciate it's a small quarter, but can you help us understand that? And whether that solutions approach is helping you maybe gain share in that area? Thanks.

Speaker 3

Yes. Thanks for the question. I think just as a reminder on the liquid asphalt side and asphalt in particular, we run that business on a margin basis. So it's important for us certainly to have the quantum of liquid asphalt in the tanks in the off season because of availability and surety of supply. So that's the primary reason that we have and utilize our storage capabilities.

Speaker 3

I think in broad terms, we're, from a quantum standpoint and a pricing standpoint, very similar to where we were last year. Again, there's various ways that we grow and protect that margin with state indexes being 1, contractual obligations to our 3rd party customers and then there's a bit of it that's kind of floated on the market. So it's almost a third, a third, a third. But again, we manage that on a margin basis and the backlogs that are associated with that, I. E, your question on paving, continue to improve both in quantum of dollars but in margin.

Speaker 3

So it gives us a good indication of where we are. The Q1 is a relatively insignificant time period for us in paving. The season really kicks off mid April through Thanksgiving, but we're seeing that continued momentum, even a month after the Q1 ended.

Speaker 8

Thank you. And perhaps just to wrap up on Americas, I think you talked before about a flattish volume view for the whole year back at the Q4 stage. Does that still apply?

Speaker 3

I would say our thoughts at that time are reflected in what we're seeing in terms of backlog and the output for the year. So yes, and that backlog is really a 6 to 9 month window in terms of demand.

Speaker 8

Thank you.

Operator

Your next question comes from the line of Gregor Kokolich with UBS. Please go ahead.

Speaker 11

Hi, good morning. So two questions, please. So firstly, maybe a little bit on Europe. Could you sort of give us a bit of an update what you're seeing there in terms of activity trends, maybe a little bit into sort of the second quarter, some weather in Q1 and the pricing trends? And then maybe a second question, maybe slightly longer term piece, and there's a slide on sustainability and carbon and so on in the pack.

Speaker 11

Guess I wanted to sort of get an update what you're thinking on carbon capture. We've seen some announcements on both sides of the pond also in the U. S. You talked a bit about SCMs already, but your thoughts on those sort of things, please.

Speaker 4

Good morning, Gregor. Jim here. Yes, in terms of Europe, firstly, in terms of activity level, it's still very early in the season for us. But to date, it's really been a story of 2 regions. Firstly, in Europe East, a very strong start to the year and that's really been underpinned by kind of the firstly on the infrastructure side where we're still kind of in the early stages of a multi year EU funding on that infrastructure across Eastern Europe.

Speaker 4

Also very good activity levels on the non res particularly into that kind of high spec industrial non res which is also strong in the region And we also benefited in Q1 from some favorable weather out Europe East. Looking to Europe West, very different in terms of weather pattern. In our main markets, which is U. K, France and Ireland, really record levels of rainfalls that we incurred in Q1. But now that we've moved past that into April May, certainly, we've kind of moved past that period of wet weather, we're certainly seeing a good recovery in activity levels in those key markets.

Speaker 4

In terms of pricing in Europe, we're getting good momentum. This will be our 7th consecutive year of pushing pricing on across Europe. Quarter 1 is ahead but has been impact pretty significantly by the kind of geographic mix of the business and particularly that strong performance in Europe East in the Q1. In fact, when you kind of mix adjust, the underlying pricing activity in Europe is kind of mid single digits positive year to date.

Speaker 3

On the question around the sustainability, which I think is a broader question than just decarbonization. But in terms of our plans, maybe just to reiterate our 2,030 ambition to reduce absolute emissions by 30% at Scope 1, 23. We made really good progress in 2023, an 8% decline in underlying admissions. We continue to be on the path, the glide path to meet that objective at 2,030 and then ultimately net 0 in 2,050. As you would expect, we stay in the loop in terms of a variety of different technologies.

Speaker 3

That's a changing world that will continue to evolve, but you would expect us to stay on top of that in terms of execution in that area. But I think it is a broader conversation than just sustainability.

Speaker 1

I'll let you say the broader conversation, right? Let's talk about circularity within CRH. Remember, Gregor, CRH is the largest recycler of any product in the United States. And again, our recycling percentage will go up again this year over last year. So sustainability is not just about CO2, it's about circularity as well.

Speaker 1

And again, we continue to make progress in that area there. It's a key focus for our business going forward. And everything we do is about reducing our carbon footprint and indeed preserving the natural scarce resources of our world.

Speaker 10

Thank you very much.

Operator

We have time for one more question. And that question comes from Arnaud Lejem with Bank of America. Please go ahead.

Speaker 10

Thank you very much. I have two questions, if I may. Firstly, on U. S. Cement, could you comment about the possibility of a second round of price increase later in the year considering the positive momentum you've had so far?

Speaker 10

And secondly, I just wanted to come back on maybe a technicality, but on Slide 12, when you talk about net debt. You talk about the net M and A contribution of outflow of 1.9. And I appreciate you had Texas, which was, I think, about $2,000,000,000 But you are expected to get some proceeds from the European Lyme disposals, which I believe in total should be about 1,000,000,000 I know there are 3 phases and maybe you don't get all of it, but is there other more outflows related to bolt ons in this number? Thank you.

Speaker 3

In relationship to a question on cement, 9% ahead in Q1. I think if you look back over the last several years, really on a market by market basis, we evaluate where those opportunities are. Underlying demand is good. It's expected to be good. I think you would expect for us to be able to look at targeted opportunities as well for a second price increase in 2024.

Speaker 4

Yeah, Andre. Just in terms of the net movement on the M and A, the SEK1.9 billion, yeah, that's just a makeup of the outflow on the Texas acquisition. Also the inflow from Phase 1 and 2 of the European Lime divestiture and then are just regular bolt ons as well, which we reported out in Q1. So it's just a net of three numbers.

Speaker 8

Thanks,

Speaker 1

Arnaud. Look, I'm afraid that's all we have time for this morning. I want to thank you for 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 August when we report our results for the Q2 of 2024.

Speaker 1

Thank you and have a good day.

Operator

Thank you. Your conference call has now ended. You may disconnect.

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