CRH H1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 8, 2024

Key Takeaways

  • CRH delivered 12% growth in adjusted EBITDA and a 270 bps margin expansion in Q2, despite significant weather disruptions, supported by positive pricing momentum and disciplined cost management.
  • The company has raised its full-year adjusted EBITDA guidance to $6.82–$7.02 billion, reflecting strong underlying organic momentum (10% growth) and contributions from recent acquisitions.
  • Year-to-date, CRH invested $3.7 billion in 20 acquisitions—most notably a majority stake in Adbri and Texas materials assets—and has increased synergy targets on the Texas deal to $65 million.
  • CRH remains committed to returning capital, with $900 million of share buybacks completed, an additional $300 million tranche announced, and a 5% quarterly dividend increase to $0.35 per share.
  • Robust demand in infrastructure (backed by U.S. IIJA and EU funding) and non-residential segments underpins continued positive pricing, while the shift to integrated solutions has driven a decade of margin expansion and high cash conversion.
AI Generated. May Contain Errors.
Earnings Conference Call
CRH H1 2024
00:00 / 00:00

There are 13 speakers on the call.

Operator

Good day, and welcome to the CRH Plc Second Quarter 2024 Results Presentation. My name is Rob, 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 to begin the conference. Please go ahead, sir.

Speaker 1

Good morning, everyone. Albert Manifold here, CRH Group Chief Executive, and you're all very welcome to our quarter 2 2024 results presentation and conference call. Joining me on the call is Jim Mitron, our Group CFO Randy Lake, Chief Operating Officer and Tom Holmes, Head of Investor Relations. Now before we get started, I'll hand you over to Tom for some brief opening remarks.

Speaker 2

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'll 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 the factors outlined on this slide.

Speaker 2

For more details, please refer to this slide, our annual report and other SEC filings, which are available on our website. I'll now hand you back to Albert, Jim and Randy to deliver some prepared remarks.

Speaker 1

Thanks, Tom. Over the next 25 minutes or so, we'll take you through a brief presentation of the results we published this morning, highlighting the key drivers of our operational performance, the Q2 of the year, our recent capital allocation and portfolio activities, as well as providing you with an update on our expectations for the remainder of the year. We'll also spend some time discussing our strong track record of financial delivery and how we have strategically positioned our business to deliver further growth and value creation going forward. Afterwards, we should be available to take any questions that you may have. And all told, we should be done in about 45 minutes or so.

Speaker 1

So at the outset, on slide 3, let me take you through some of the key messages from this morning's announcement. Our differentiated strategy continues to deliver industry leading performance. For the Q2 of the year, I'm pleased to report further growth in adjusted EBITDA and margin compared to the prior year period. This was supported by positive pricing momentum and our relentless focus on cost management, all delivered against the backdrop of some significant weather disruption. Our performance also demonstrates how our carefully constructed portfolio, combined with the unmatched size and scale of our operating footprint, helps to mitigate the impact of adverse weather events in specific regions, resulting in less volatility and more consistent performance through the cycle.

Speaker 1

Looking ahead to the remainder of the year, well, the outlook for our business is positive, supported by favorable underlying demand across our key markets. Based on current trading conditions and the momentum we see across our businesses, I'm pleased to report that we are raising our guidance. Assuming normal seasonal weather patterns and no major dislocations in the macroeconomic environment, we now expect full year group adjusted EBITDA to be between $6,820,000,000 $7,020,000,000 representing another strong year of delivery for CRH. We've been very active on the acquisition front. Year to date, we've invested $3,700,000,000 on 20 acquisitions, increasing our exposure to attractive high growth markets and further developing our solutions capabilities in materials, road and utility infrastructure and outdoor living.

Speaker 1

In July, we completed our acquisition of a majority stake in Adbri, a leading provider of building materials in Australia. This represents an attractive new growth platform to expand our solutions strategy and enhance our existing operations in Australia, a market where we've been operating for over 15 years. I'm also pleased to report that the integration of our $2,100,000,000 acquisition of materials assets in Texas is progressing well and we've increased our run rate synergy target to approximately $65,000,000 The strength of our balance sheet also enables us to continue to return significant amounts of cash to our shareholders. Our ongoing share buyback program has returned approximately $900,000,000 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 In line with our strong financial position and policy of consistent long term dividend growth, the Board also declared a new quarterly dividend of $0.35 per share, representing an annualized increase of 5%.

Speaker 1

So it's been a busy year so far and all this demonstrates our focus on the efficient allocation and reallocation of capital to maximize value for our shareholders. Turning to Slide 4 and our financial highlights for the Q2 of the year. Overall, a good performance with adjusted EBITDA, margin and earnings per share all well ahead of the prior year period. Notwithstanding the impact of adverse weather and activity levels during the quarter, we delivered adjusted EBITDA of $2,300,000,000 12% ahead, supported by strong organic growth as well as good contributions from acquisitions. And against the backdrop of some inflationary cost pressures, I'm also pleased to report further margin expansion, 2 70 basis points ahead of the prior year.

Speaker 1

All of this translates into good growth in our earnings per share, up 16% on the prior year period. Now at this point, I'll hand you over to Randy take you through the operating performance of each of our businesses.

Speaker 3

Thanks, Albert. Hello, everyone. Turning to Slide 6 and beginning with Americas Materials Solutions, which delivered a strong Q2 performance. Total revenue and adjusted EBITDA were 6% and 28% ahead of prior year respectively, despite contending with some challenging weather conditions which impacted our operations in the South and Midwest regions of the United States in particular. Notwithstanding unfavorable weather, the underlying demand backdrop across our key markets remains favorable.

Speaker 3

Infrastructure is our largest end market in North America, where demand is underpinned by the significant increase in U. S. Federal funding through the IIJA, as well as positive momentum in transportation funding initiatives at the state level. We also continue to see good mega project activity supported by both public and private investment. In terms of the input cost environment against a backdrop of continuing inflation in raw materials, labor and subcontractor costs, I'm pleased to see good commercial discipline from our teams on the ground with positive pricing momentum across all product lines during the Q2 of the year.

Speaker 3

In Essential Materials, 2nd quarter revenues were 5% ahead, supported by pricing growth in Aggregates and Cement of 12% 8%. In Road Solutions, Q2 revenues increased by 6 percent, driven by improved pricing in asphalt and ready mix concrete. And together with strong cost control, operational efficiencies and the impact of a gain on certain land asset sales, this enabled us to deliver 4 60 basis points of margin expansion compared to the prior year period. As Albert mentioned earlier, good to see the integration of the materials assets we recently acquired in Texas progressing well. We've already identified an additional $5,000,000 of synergies, which increases our total run rate synergy target to 65,000,000 dollars I'm also pleased to report that as we look ahead for the remainder of the year, there's good momentum in our backlogs ahead of prior year in both revenue and margin.

Speaker 3

Next to Americas Building Solutions on Slide 7. And here, our business delivered a resilient performance supported by disciplined pricing and good contribution from acquisitions. Notwithstanding the impact of subdued new build residential demand and challenging weather conditions, 2nd quarter revenues for our Building and Infrastructure Solutions business were in line with prior year, supported by significant IIJA funding for critical utility infrastructure. Our outdoor living solutions business also continues to perform well, benefiting from its large exposure to more resilient repair and remodel activity. For America's Building Solutions overall, I'm pleased to report that against a 1% decline in 2nd quarter revenue, we've been able to maintain our adjusted EBITDA at prior year levels and improve our margins by a further 40 basis points.

Speaker 3

Moving to Europe on Slide 8, and first to the performance of Europe Material Solutions, where good growth in Central and Eastern Europe was offset by weather impacted activity levels in Western Europe. While residential demand remains subdued, and non residential demand continues to be underpinned by government and EU funding programs. And we're now in our 7th consecutive year of positive pricing momentum in Europe, with cement pricing ahead across all major markets. And I'm pleased also to see further improvement in our margin, 110 basis points ahead of prior year, reflecting good commercial management and strong cost control across our businesses. Our second quarter results also reflect the impact of Phases 1 and 2 of the Europe Lime divestiture.

Speaker 3

The final phase, consisting of our Lime operations in Poland, is expected to complete in the second half of the year. Next to the performance of Europe Building Solutions on Slide 9, our smallest segment, representing less than 5% of group adjusted EBITDA in 2023 and much more exposed to residential new build construction than the rest of our businesses. Overall, a challenging backdrop with activity levels impacted by subdued residential demand. Here, we continue to focus on disciplined commercial management and cost saving initiatives to protect our profitability. And I'm pleased to report that we're beginning to see some improving trends with the benefit of self help measures starting to come through.

Speaker 3

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. Turning to Slide 11, which sets out the key components of our 2nd quarter adjusted EBITDA performance. Starting with organic growth of $222,000,000 11% ahead on a like for like basis, reflecting good underlying demand across our key markets, further pricing progress and the continued benefits of our differentiated strategy. Acquisitions, net of divestitures, delivered a further $15,000,000 of adjusted EBITDA, primarily reflecting the contribution from our acquisitions of material assets in Texas and the impact of the divestiture of Phases 12 of the European Line Operations. Overall, we delivered approximately $2,300,000,000 of adjusted EBITDA, 12% ahead of the prior year period.

Speaker 4

Turning next to Slide 12, where I will take you through some of the key components of our net debt movements 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 inflow of approximately $800,000,000 in the first half of the year. Acquisitions, net of divestitures and other items resulted in an outflow of approximately $2,600,000,000 while we also invested $1,100,000,000 in capital expenditure to support further growth in our existing business. In addition, we returned $2,000,000,000 in the form of dividends and share buybacks, demonstrating our commitment to returning cash to our shareholders.

Speaker 4

Taking all of this into account results in a net debt position of CAD10.3 billion at the end of June, representing a net debt to adjusted EBITDA ratio of approximately 1.6 times on a trailing 12 month basis.

Speaker 1

Thanks, Jim. Now at this point, I'd like to take a step back and provide some context in relation to the consistency of our financial performance over time. Turning to Slide 14. And as you can see, CRH has delivered consistent profitable growth over the last decade. In addition to growing our top line, we've delivered strong growth in adjusted EBITDA and earnings per share, equivalent to compound annual growth of 15% 19% respectively.

Speaker 1

You can also see that we've significantly increased the level of cash we're generating, reflecting our relentless focus on cash conversion. All of this translates into a compound annual total shareholder return of 16% over the last decade, a performance that highlights CRH as the reference compounder of capital in our industry. On slide 15, you can see that on a relative basis, we've also delivered superior performance against some of the best operators in our industry. Over the last 5 years, we've delivered compound annual profit growth of 12%. We've consistently converted over 80% of our profits into cash and we've generated an annual total shareholder return of 24%.

Speaker 1

So the message is clear. Our business is delivering superior performance for our shareholders. And let me briefly take you through some of the key drivers behind this performance. We've built leading positions in attractive high growth markets, regions such as the South and West of the United States and Central and Eastern Europe, which have significant construction needs a result of population growth and migration trends. Our strategy is enabling us to differentiate ourselves from the rest of the industry, having transitions away from being a sole supplier of base materials to a provider of integrated and value added materials, products and services, bespoke solutions that serve the increasingly complex needs of our customers and generate higher growth and value for our shareholders.

Speaker 1

Our unique portfolio of businesses also provides us with attractive opportunities for future growth, both organically and through acquisition. This portfolio also provides us opportunities to expand and enhance our offering to customers, thereby opening up new markets and avenues of growth that wouldn't otherwise be available to us. We have delivered 10 consecutive years of margin expansion, supported by our focus on continuous business improvement and the strategic reshaping and repositioning of our business through active portfolio management. Our business has generated $21,000,000,000 of cash over the last 5 years, representing approximately 80% conversion of adjusted EBITDA and providing significant optionality for future growth and value creation. In this regard, we have a proven track record supported by our disciplined approach to capital allocation for both short term performance and long term value.

Speaker 1

Moving to Slide 16, and as we sit here today, fundamentally, our business is in a good place. We are the largest building materials business in the U. S. And Europe, the 2 most attractive construction markets in the world. Through our agility, our focus on innovation and our positioning across the construction value chain, we believe we are uniquely positioned to deliver further growth and value creation going forward.

Speaker 1

We are the largest beneficiary of a golden age of U. S. Construction, supported by significant federal investment as well as a renewed drive for the on shoring of manufacturing activity. This will clearly support future organic growth, but that's not the only source of growth in CRH. Our investments in M and A have historically driven 2 thirds of our growth and we have a strong pipeline of opportunities in front of us.

Speaker 1

Taking both together, this has enabled us to consistently deliver double digit earnings growth through the cycle. Our core philosophy of continuous business improvement and being best in class operators is deeply embedded in the DNA of our businesses. Through operational excellence initiatives and best practice programs, we are focused on improving profits, margins, returns and cash year after year. We have a strong and experienced leadership team who are relentlessly focused on continually improving our businesses. Through the active management of our portfolio in recent years, we have built a structurally better business, a simpler, leaner and more focused business that is less cyclical and less capital intensive, improving our performance and becoming a leader in sustainable construction.

Speaker 1

The disciplined allocation of capital has been a hallmark of CERUS for many years and has helped us to deliver one of the strongest balance sheets in our history, providing us with very significant optionality for the future. Now at this point, I am going to hand you over to Jim to take you through our capital allocation priorities going forward.

Speaker 4

Thanks, Albert. Turning now to Slide 17. When we look at the strength of our business today, our growth profile, the level of cash we are generating and the strength of our balance sheet, we believe that we will have at our disposal financial capacity in the order of $35,000,000,000 over the next 5 years. And here, we have set out some of the opportunities we see to allocate that capital over that time frame. 1st and foremost, we are a growth company.

Speaker 4

We want to continue to grow our business for the benefit of our shareholders, and we have a strong and active pipeline of acquisition opportunities. Our industry is still very fragmented, and our integrated strategy provides us with multiple avenues for further growth. We also have a strong pipeline of expansionary CapEx opportunities to accelerate organic growth in our existing business, expanding capacity in markets where we see attractive future growth prospects. These are high returning, low risk investments, which we believe will deliver significant value in the years ahead. Of course, we will remain disciplined and value focused, applying strict performance and returns criteria to every investment we make.

Speaker 4

Overall, we expect to have the capacity to allocate up to $24,000,000,000 or approximately 70% towards acquisitions and growth CapEx, investments to support future growth and value creation for years to come. We also expect to have the capacity to return significant amounts of cash to shareholders. We have a proud track record of consistent long term dividend growth and our current dividend run rate returns approximately $1,000,000,000 on an annualized basis. We also view share buybacks as an efficient means of returning cash to shareholders. Since 2018, our share buyback program has returned approximately $8,000,000,000 of cash to shareholders and is currently running at an annualized rate of approximately $1,200,000,000 So overall, as you can see, significant opportunities going forward.

Speaker 4

And I can assure you that we will remain disciplined and value focused when it comes to the allocation of that capital.

Speaker 1

Thanks, Jim. Now before I provide an update on our expectations for the full year, let me share our thoughts on the outlook across our markets. Turning to Slide 19. North America represents approximately 75% of our adjusted EBITDA with the remaining 25% in Europe. First to infrastructure, which represents the largest exposure for our businesses.

Speaker 1

Here, the outlook is robust, with demand in the United States underpinned by the continued rollout of a once in a generation federal and state investment program. Similarly in Europe, we expect robust demand in infrastructure activity to continue, supported by significant investment from the government and EU funding programs. In non residential, we expect our key segments to continue to benefit from increased reindustrialization and on touring activity in both the United States and Europe. In the residential segment, we expect new build activity in the U. S.

Speaker 1

And Europe to remain subdued due to affordability challenges caused by the current interest rate environment. As we said previously, 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 new build residential construction is expected to remain subdued. 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 20, and against that backdrop, reflecting the positive momentum we see across our businesses, as well as the impact of recent portfolio activity, this morning we're pleased to raise our financial guidance for 2024.

Speaker 1

Assuming no more weather patterns for the remainder of the year and no major dislocations in the macroeconomic environment, we now expect full year group adjusted EBITDA to be between $6,820,000,000 $7,020,000,000 net income to be between $3,700,000,000 $3,850,000,000 and earnings per share to be between $5.40 $5.60 representing another strong year of delivery for CRH. So that concludes our presentation this morning, and we're now happy to take your questions. I'll now hand you back to the moderator to coordinate the Q and A session of our call.

Operator

Thank you. And we'll take our first question from Trey Grooms of Stephens. Your line is

Speaker 5

open. Hello. Good morning, everyone. Nice work in a really tough operating environment. I guess, first off, could you guys maybe talk about some of the puts and takes on the updated guidance and maybe how much of the increase is organic versus inorganic?

Speaker 6

That's at the start there. Yes, look, obviously, just a strong performance this year and our integrated solution strategy really delivering for us

Speaker 1

in what has been a tough quarter for the industry. But maybe, Jim, you might just take us through what the input the puts and takes, as Trey says, for the first half and indeed the changed guidance for the full year?

Speaker 7

Yes. Good morning, Trey. Firstly, good underlying momentum really is driving the full year guidance and that implies an organic EBITDA growth of about 10% at that midpoint level. And just maybe for a bit more clarity and detail, in that new EBITDA guidance, it also includes $70,000,000 for Adbri, taking our total full year contributions from acquisitions, net of divestments of about £150,000,000 And maybe as well, just to say that at the new net income guidance level, it includes CAD 100,000,000 of Adbri and the difference being the inclusion of the contributions from the joint ventures from Adbri.

Speaker 5

Got it. Okay. That's super helpful. Thank you for that. And I guess my follow-up on that is clearly strong performance on U.

Speaker 5

S. Pricing and your volume has held up well given the really tough backdrop we saw in the quarter. Any additional color that you could give us on your pricing and volume outlook for U. S. Aggregates and U.

Speaker 5

S. Cement?

Speaker 1

Thanks, Trey. Maybe Randy might help us. And actually as we're talking about the U. S, obviously, we've got a European business. Well, Jimmy, you might just take us through some of the European volumes and pricing as well.

Speaker 3

Yes. So pricing for Q2 in ag was up 12% and cement up 8%. And that's really supported by really our outlook and the backlog that we have. So we have good momentum moving forward there. I think our opportunities as we move into the second half of the year is the potential for some mid year price increases in targeted markets.

Speaker 3

And I'd say broadly we're anticipating, again, based on that backlog is that volumes for both cement and ag will be broadly flat with last year.

Speaker 7

Yeah. And from a European perspective, Trey, what we saw was really similar to the U. S, positive pricing momentum continuing, actually our 7th consecutive year of price increases in Europe at this stage. The quarter 2 cement price was slightly ahead year on year, but actually when you look at it on a mix adjusted basis, it was much closer to mid single digits. I think what's really encouraging is that we continue to drive margin expansion across the entire European business in Q2.

Speaker 5

Perfect. Thanks for that color. Thanks for taking my questions and keep up the good work. Thank you.

Speaker 1

Thank you.

Operator

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

Speaker 8

Hi. Thank you for taking my questions today. Just first focusing on Q2, could you give a little bit more color on performance drivers, in particular, on your margin expansion puts and takes and how we should think about that going forward? Thank you.

Speaker 3

Yes. Thanks, Kevin.

Speaker 5

Randy

Speaker 3

here. Well, when we look at Q2 and I think if you look at the full year and actually, we've been on a journey here for 10 years, kind of the reshaping of the business model to be much more integrated and I'd say much more proactive on the front with customers to provide kind of full solutions in the markets, the end markets that we serve infrastructure, non res and res probably more in the RMI side. We're not immune to weather. So weather certainly impacted a bit of our ability to execute. But I think it just speaks to the underlying value of the model that even in those difficult times able to deliver higher sales, better profits, more cash, solid returns for the benefit of our shareholders, 1.

Speaker 3

But that model of early engagement with our key customers and DOTs being a large key customer is really important. So the ability for us to engage early on the design, engineering, the technical side, all the way through the manufacturer, the installation and actually the maintenance of these projects are important. If you think about the end customers, especially in roads or infrastructure, there's a direct correlation in the customer base between our road Every road needs to deal with water. We have the capabilities doing that. And so for our customers, one point of contact to be able to design, engineer and execute is critically important.

Speaker 3

So I think that's what's coming through in terms of underlying delivery on the margin side. And we're optimistic as we look forward because the backlogs for us both in revenue and margins, are up for the full year. We have pretty much a 6 to 9 month window in terms of our outlook. So I think we draw a lot of confidence from that. What we're seeing, though, as well is that the combination of federal and state money has led to, I'll call them, larger projects, maybe more complex projects, higher in specification and performance criteria, and they're multi year.

Speaker 3

And I think that plays to our strength to drive that early engagement, leverage some of those soft skills we have and then to be able to deliver in a timely manner. And so the focus on roads, water, energy, telecoms, all those coming through both in performance and also our outlook for the balance

Speaker 5

of the year. Tasha, maybe just to

Speaker 4

add on

Speaker 7

the are you asked specifically on the margin? Jim here, just to say, yes, American Materials Solutions very strong, up 4.60 basis points in the quarter. That did include a land sale of about $80,000,000 And when you strip that out that land sale, it's still a very strong 300 basis points increase on the Americas Solutions, in the quarter too. Now that kind of land sales for us would be not would be very typical for us on an annual basis, but as you know they can be lumpy and difficult to predict where and when they arise, but nothing unusual from an annual basis, but it's in those Q2 numbers for American Material Solutions.

Speaker 8

Okay, great. Thank you. And then just as a follow-up, could you give us a little bit more color on some of the acquisitions that you made in Q2, both in the U. S. And Europe on the material side?

Speaker 8

Thank you.

Speaker 3

Yes. When you look in the U. S, Catherine, a couple of callouts on the material side or first entry into Northern California with the Bodine acquisition. I'd say that's a very typical deal for CRH, kind of planting a flag in a high growth market. Actually, it's our 1st entrance in the materials into California.

Speaker 3

We've been in California for quite some time on the product side. But what's nice about that opportunity is the significant reserves that are associated with that deal and then the integrated nature, kind of the downstream consumption of aggregate. You move further east from California to Colorado and a good acquisition area there. Again, a complementary position to our Western Slope Colorado position, kind of a natural extension. Again, an integrated business, which they tend to be ag, asphalt, ready mix.

Speaker 3

So a solid business in the U. S. Yes.

Speaker 7

Catherine, I think just post actually Q2, we did a nice deal at Eastern Europe in the whole water infrastructure business, where we acquired the market leading provider of water infrastructure solutions in Romania. And that's really beginning to build out our water infrastructure business that we have in the U. S. And starting to build that out across Europe and our Downstream Solutions business.

Speaker 8

Okay, great. Thank you very much.

Operator

Your next question comes from the line of Michael Dudas from Vertical Research Partners. Your line is open. Michael, your line is open.

Speaker 5

Yes. Good morning, gentlemen. Can you hear me?

Speaker 1

Yes, Michael, we can hear you. Okay.

Speaker 9

Great. Thank you. Maybe Randy, maybe you could share a little more details on upgrading your synergy target with your Texas acquisition and maybe how the historic wet weather impacted those operations? How you see it as we move into the second half of the year?

Speaker 3

Yes, I appreciate the question. As I mentioned just a moment ago, we're certainly not immune to the weather. But if you take a step back, Texas, we're the largest building materials solutions provider in Texas. So a very integrated business across all key market segments. So infra, non res and res and specifically in around RMI.

Speaker 3

I think that certainly helps and it's kind of a microcosm of the overall strategy of CRH, kind of the diversity of that footprint, the breadth of the products, the engagement with key customers. And so I think that even in a very tough weather environment produced solid results and it's really a furtherance of our overall strategy. The plant specifically in Hunter in San Antonio, fit very nicely into our network. And so what we are seeing is kind of a furtherance of the opportunity from a network standpoint, kind of logistics, the opportunity for internal consumption in our downstream business and other things in and around operational performance that you would expect, right? We're a global leader in terms of cement operations.

Speaker 3

And so bringing the technical expertise into that operation, comparing it to our other plants is naturally going to drive additional opportunity. And so we're happy to uncover another $5,000,000 bringing that total to $65,000,000 over 3 years in terms of synergy opportunity. But I'd say it's not unusual. I mean, look back in the acquisition of Ash Grove back in 2018, and we've been fortunate enough to be able to drive a doubling of the EBITDA of that business in 5 years. And so it's very much the same model being executed here.

Speaker 6

I think, Michael Again, as Randy says, obviously, the weather was very challenging in Texas. But if you take a step back and the rest of our industry has been significantly impacted by bad weather in the Q2. But for us, the continued delivery really attests to the strength

Speaker 1

of the solutions model that

Speaker 6

we have here almost through the cycle we continue to deliver. That's the differentiator here with regard to CRH, be it Texas and Florida, across the Southeast or indeed over

Speaker 1

in Europe as well, where the weather has been very tough in Western Europe as well, we continue to deliver.

Speaker 10

Excellent. Thanks, gentlemen.

Operator

Your next question comes from the line of Ross Harvey from Davy. Your line is open.

Speaker 10

Hi, all. Thanks for taking my question. I'd like to focus on costs, if we can. Can you discuss maybe the energy and the general input cost backdrop?

Speaker 7

Good morning, Ross. Jim here. I'll take that one. Yes, listen, Ross, we continue very much to operate in an inflationary environment across all the business. And we look certainly at H1.

Speaker 7

From an energy perspective, first, maybe we did have some energy tailwinds in H1, but they've been moderating as we went through H1 and further moderating into H2. When we look out over the full year, I think our energy costs are going to be modestly lower on a per unit cost basis. Across the rest of the cost mix, really continued inflation, mainly in the areas of labor, raw materials, subcontractors and indeed repair and maintenance costs. And I think across the full year, we're kind of expecting a mid single digit percentage increase in cost categories across those particular categories. And what it does is really highlights the importance of getting out early and that kind of continued price momentum.

Speaker 7

And when you factor in the combination of the price and the cost, we're happy to be targeting our 11th consecutive year of margin expansion across the full business.

Operator

Your next question comes from the line of Gregor Goulkos from UBS. Your line is open.

Speaker 11

Hi, good morning, good afternoon. So a couple of questions. The first one, if you could just give us a bit of an update where we are on the index inclusion situation given the relisting into the U. S, please? And then secondly, I mean, obviously, I think you said it now numerous times, you are sort of the business model, how it's been set up, obviously delivered particularly this quarter and we can really see it in AMAT.

Speaker 11

So my question to you is, where are we on this journey? If you could just give us sort of how much is ahead of us, how much is already realized in terms of that integrated approach and sort of the potential for margins to expand further? Thank you.

Speaker 7

Yes, Gregor, Jim here. Good afternoon. I'll take maybe the first one on the indexation inclusion. Yes, we've made really good progress since the relisting last September. We're growing now over 80% of our daily volumes are trading on the NYSE.

Speaker 7

And at this stage, the majority of our shareholders are actually U. S.-based shareholders. As you know, we've kind of we since in May, we were classified into the MSCI USA and also in June, we were added to the Russell 1,000 and the S and P TMI. The important remaining indices at this stage first is our S and P 500 and the CRISP. As you know, ultimately, the inclusion is at the discretion of the index providers.

Speaker 7

We're confident that we meet all the eligibility criteria and we'd certainly be seeking inclusion as soon as possible now.

Speaker 1

Thanks, Jim. And Gregor, look, you're right.

Speaker 6

I mean, again, we outperformed the industry. We've done so for a decade now at this stage, but you can look at the stats that we produce or how much anybody else produce. We don't just sell base materials, which we used to do 20 years ago. We convert those base materials into value added products, which are technically capable and we provide services and knowledge and design skills in and around those that help make the construction process simpler, quicker, cheaper, and faster for our customers. We have spent decades building this strategy and it takes decades to put together.

Speaker 6

It is only just starters. I'm sitting here in New York City this morning, so I'd say in U. S. Pilots, we're really just starting the 2nd innings. It's only just starters.

Speaker 6

The best years are ahead of us with regard to this because we can see we're tackling the trends that are out there. There's less labor out there to do construction.

Speaker 1

People want things done quicker.

Speaker 6

They need to be done more resilient. It has to be done in a safer way, and particularly for big heavy infrastructure projects, which is our wheelhouse. This is absolutely the perfect place for us to be in and the best year that are ahead of us for the next decade.

Speaker 11

Excellent. Thank you.

Operator

Your next question comes from the line of Brent Thalmann from D. A. Davidson. Your line is open.

Speaker 10

Great. Thank you. I just had a question just in regards to M and A acquisitions, divestitures, you've been very active there. How are you thinking about the portfolio as you move into the second half of the year and into 2025?

Speaker 6

Thanks, Brett. I'll take that one. If you look back

Speaker 1

over the history of Sergio over the last decade, we really have accelerated our portfolio management. And it's been a key part of our success over the last 10 years. That process of the allocation and reallocation of capital across our portfolio has been a key driver of the creation of shareholder value over the last decade. Now I think it's important to be aware of how we think about our portfolio going forward, not just for 2024, but 2025 and beyond. Now, obviously, we focus on the businesses where we win, but not just where we win, more importantly, it's how we win and why we win.

Speaker 1

And in particular, not just today, but tomorrow, because that's reshaping our business for the future. Now, look, fine words, but the action stand over it. If I look at the business you had in 2013, 50% of the business that we owned in 2013, we've sold. I don't know any other business that has done that. And we've done that because we actively repositioned our businesses.

Speaker 1

So we sold €13,000,000,000 worth of dollars worth of business and we bought $24,000,000,000 worth of businesses over the last 10 years. It is for sure that it's going to continue for the next decade. And the reason why we focus on our portfolio so much, as much as we do it being an operator, is because our markets, our world is changing. As I said earlier, there's not enough labor out there to build at the pace that the world needs to build in. Construction is too costly.

Speaker 1

It's too slow. It's too dirty. And quite frankly, it's too inefficient. So we are constantly adapting our portfolio and our structures to our solution strategy to address these challenges and to capitalize on the opportunities you see for CRH. And you see the results of that today into the first half results.

Speaker 1

Integrated solutions helps us build quicker, cheaper, faster, safer, and in a more resilient way, preparing for the world of tomorrow. So we've always shown ourselves to be very agile in CRH and nothing is off the table in terms of how we look at our business and our portfolio. 12 years ago, CRH was listed primarily in Dublin. We moved our list into London. And last September, we moved our list into New York.

Speaker 1

All of that was a focus on accessing deeper pools of capital and telling our story to a wider population. A decade ago, 10 years ago, we were 7 divisions across Sea Ridge. We brought that down to 3 divisions. 10 years ago, our EBITDA was $1,500,000,000 This year, we're going to be touching $7,000,000,000 10 years ago, the market cap of our business was $15,000,000,000 and this year, we're in around $55,000,000,000 We achieved all these things because we were agile. We aspired to being a rented business, and we adapted our businesses, our business focus, our business model, our portfolio and our structures to drive shareholder value.

Speaker 1

It's a part of our DNA in CRH. We're very restless. We continue to push on. We adapt. We change.

Speaker 1

We never stop. But we now keep loose focus on our North Star, which is the maximization of shareholder value. And as we think about our portfolio, as you think about our better portfolio, that's what you should focus on.

Speaker 10

Very good. One more if I could. I suspect your Americas Building Solutions Group may have the most to leverage to what sort of prevailing interest rates do here in the next several months. If you could just affirm what's anticipated for that business group in the second half in light of some probability we could see an interest rate cut? And I guess just your overall view on how critical that is to sort of the future performance or kind of recovery and growth for that group on an organic basis?

Speaker 1

To give a comment, I'm just going

Speaker 6

to clarify the answer because the line just spoke

Speaker 1

a bit very slightly. I think you were asking broadly speaking what was the outlook for

Speaker 6

our Americas Business Solutions business in

Speaker 1

the second half of the year,

Speaker 6

what the drivers might be. So I'll just ask

Speaker 1

that question on your behalf. I think I got it right. Randy?

Speaker 3

Yes. If you think about that business, there's 2 major components. It's the critical utility infrastructure that addresses, I'd say, ongoing trends of need in around water, energy and telecoms. And that's very much supported by federal and state investments. So the balance of the year, that's probably unaffected by the movement in interest rates.

Speaker 3

Although if you'd see an interest rate move downward, certainly more new res would come underway and products such as those would be used in that kind of capacity. So that could be a positive. But the second business is really around our outdoor living business and that's focused primarily on the RMI segment. So it's that backyard. So it's the engagement through our channel management with our retail customers and then our professional business as well.

Speaker 3

And we've been very deliberate about how we've organized and structured that business and created solutions for those critical customers. So it's the ability for us from a network standpoint and logistical standpoint to serve demanding customers in that space in the outdoor living area. It's the idea of bringing in a collection of products to service those retail customers and professional distributors of our products. And that provides a little bit of risk off because of the type of products that are served there. Certainly, what we've seen in that space is that's been much more resilient.

Speaker 3

So it's not as susceptible to interest rate movements. I guess you could assume new build would certainly be a positive in that space. But the way we look at it today, I think we said in our opening remarks that we don't see in terms of underlying activity much movement in the res space as we finish out 'twenty four.

Speaker 5

Very good. Thank you.

Operator

We have time for one last question. Our last question comes from the line of Keith Hughes from Truist. Your line is open.

Speaker 12

Thank you. Question is in the Road Solutions business within American Materials. Had solid growth in the quarter, I assume weather played a role there. What's your outlook for growth in that business in the second half of the year assuming weather was more normalized?

Speaker 3

That business, I think mentioned at the beginning, is firmly supported by the investment of the IIJA and the state initiatives. And again, there's the IIJA is a 5 year bill. I think we said last year that we thought it was probably going to take 5 to 7 years for actually those funds to make its way completely into the market. And we stand by that. So we're seeing certainly increased bidding activity.

Speaker 3

Our backlogs would reflect higher revenues and better margins. And I think it's our hope certainly that the weather would improve, but it's the diversity of what we offer in that space through that road solutions business, both on kind of typical repair and maintenance as well as larger, more complex capacity expanding products. So we see that continuing to deliver. And when we think about the road solutions, I often think back to what that business was 10 years ago where we sold some rock and we sold some asphalt. That combination, that solutions mindset that we bring to the equation for those DOT customers really allows us to leverage our competitive advantage and actually, at the end of the day, provides them with better products, better performance and gives us kind of a unique offering versus that of the broader market.

Speaker 6

Okay. Listen, ladies and gentlemen, that's all we have time for today. I want to thank you for your attention. And as always, if you have any follow-up questions, please feel

Speaker 1

free to contact our Investor Relations team. We look forward to talking to you again in November when we report our results for the Q3 of 2024. Thank you, and have a good day.

Operator

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

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