Q2 2025 Earnings Call Transcript

Good day, and welcome to the CRH Second Quarter 2025 Results Presentation. My name is Krista, and I will be your operator today. [Operator Instructions] At this time, I'd like to turn the conference over to Jim Mintern, CRH Chief Executive Officer to begin the conference. Please go ahead, sir.

Hello, everyone. Jim Mintern, here, CEO of CRH, and you're all very welcome to our Q2 2025 Results Presentation and Conference Call. Joining me on the call is Nancy Buese, our CFO; Randy Lake, our COO; and Tom Holmes, Head of Investor Relations. Nancy was appointed to the role in May, and her track record of financial leadership and operational insight will be invaluable as we undertake the next phase of our growth journey.

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

Thanks, Jim. Hello, everyone. I'd like to draw your attention to Slide 1 shown here on the screen. During our presentation, we will be making some forward-looking statements relating to our future plans and expectations.

These are subject to certain risks and uncertainties, and actual results and outcomes could differ materially due to 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 you back to Jim, Nancy and Randy to deliver some prepared remarks.

Thanks, Tom. Over the next 20 minutes or so, we will take you through a brief presentation of our results for the second quarter of the year, highlighting the key components of our operating performance, our recent capital allocation activities as well as provide you with an update on our expectations for the year as a whole. We will also spend some time discussing our strategy and how we have positioned our business to deliver further growth and value creation going forward. At the outset on Slide 3, let me take you through some of the key messages from our results.

We are pleased to report a record second quarter performance underpinned by the execution of our proven strategy and uniquely connected portfolio, which continues to deliver value for our shareholders. We have also been actively reinvesting in our business and allocating capital towards attractive high- growth markets benefiting from secular tailwinds. In the year-to-date, we've invested approximately $1.7 billion across 19 bolt-on acquisitions and growth CapEx investments across our business, and we have a strong pipeline of further growth opportunities in front of us. We also recently announced an agreement to acquire Eco Material Technologies, a leading supplier of supplementary cementitious materials in North America for a total consideration of $2.1 billion.

This is a unique opportunity to accelerate our cementitious growth strategy, which we believe will deliver significant incremental long-term value for our shareholders, and I will take you through that in further detail a little later. Looking ahead to the remainder of the year, underlying demand across our key end-use markets remains positive, and our backlogs are ahead of prior year. Based on current market conditions and the momentum we see across our business, we are pleased to raise our financial guidance for 2025. Assuming normal seasonal weather patterns and no major dislocations in the political or macroeconomic environment, we expect full year adjusted EBITDA to be between $7.5 billion and $7.7 billion, representing 10% growth at the midpoint and another strong year of delivery for CRH.

Turning now to Slide 4 and our financial highlights for the second quarter. Overall, a strong performance with revenues, adjusted EBITDA, margin and diluted EPS all at record levels and well ahead of the prior year period. Total revenues of $10.2 billion represent a 6% increase over the prior year, supported by favorable underlying demand, positive pricing momentum across our business and strong contributions from acquisitions. This enabled us to deliver $2.5 billion of adjusted EBITDA in the quarter, a 9% increase over the prior year.

I am also pleased to report a further 70 basis points of margin expansion, demonstrating our relentless focus on continued operational excellence and strong cost management across our business. All of this translated into further growth in our diluted earnings per share, up 3% on the prior year period. Now I will hand you over to Randy to take you through the operating performance of each of our businesses.

Thanks, Jim. Hello, everyone. Turning to Slide 6 and First to Americas Materials Solutions, which delivered further profit growth and margin expansion in the second quarter, driven by the continued execution of our strategy, increased operational efficiencies and contributions from acquisitions. Despite contending with some adverse weather conditions, which impacted activity levels, I'm really pleased with our teams and how they were able to quickly adapt to the stop-start nature of the season, controlling and pacing our cost to optimize our operations, resulting in total revenues and adjusted EBITDA 2% and 4% ahead of prior year, really highlighting the resiliency of our business.

In Essential Materials, second quarter revenues were 4% ahead supported by increased volumes and positive pricing momentum in both aggregates and cement. Aggregates pricing increased by 4% compared to the prior year or 7% on a mix adjusted basis. Cement pricing increased by 2%, reflecting regional variances across our operating footprint. In Road Solutions, Q2 revenues were 2% ahead despite weather impacted activity levels, benefiting from our national scale and diversification.

And we'll discuss the strengths of our fully connected roads offering in further detail later. In terms of the demand environment, the underlying backdrop across our key markets remains robust. Infrastructure, our largest end market, continues to be underpinned by state and federal funding through the IIJA. Less than 40% of IIJA highway funding has been deployed to date, highlighting the significant runway we still have ahead of us.

State funding is also strong, with transportation budgets for fiscal year 2026 expected to increase by 6% over the prior year. As Jim mentioned earlier, looking ahead to the remainder of the year, I'm encouraged by the positive momentum in our backlogs, which are ahead in both revenue and margin. We also continue to see good levels of reindustrialization activity, particularly in manufacturing and data centers. These large-scale, highly specified projects are an excellent fit with our connected portfolio, enabling us to not just provide the essential materials, but also the water and energy infrastructure critical to these types of facilities.

And you can see this coming through in the performance of Americas Building Solutions on Slide 7, where our business delivered strong profit growth driven by good underlying demand and commercial management. Second quarter revenues for our Building & Infrastructure Solutions business were 3% ahead, supported by robust demand in our key markets of data centers, water and energy infrastructure. Our Outdoor Living Solutions business also continues to benefit from its large exposure to more resilient residential repair and remodel activity, with Q2 revenues 2% ahead of the prior year. For Americas Building Solutions overall, total revenue growth of 2% translated into a 5% increase in adjusted EBITDA and a further 70 basis points of margin expansion.

Moving to International Solutions now on Slide 8, where our business also delivered a strong second quarter performance, supported by an improving demand environment, further pricing momentum and operational efficiencies. On the back of a 13% increase in revenue, we delivered a 23% increase in adjusted EBITDA and a further 170 basis points of margin expansion. In Central and Eastern Europe, we continue to experience positive underlying demand and early signs of recovery in new build residential activity, while in Western Europe, activity levels continue to be supported by infrastructure and nonresidential demand.

Our results also reflect the acquisition of Adbri last year, and I'm pleased to report that the business is performing well, with commercial and operational synergy realization ahead of our original expectations. Overall, we're pleased with further growth and margin expansion across each of our businesses. And at this point, I'll hand you over to Nancy to take you through the financial performance and capital allocation activities in further detail.

Thank you, Randy. Hello, everyone. It's a pleasure to speak to you for the first time as the CFO of CRH. It's an exciting time to be here, and I look forward to working with many of you as we execute our strategy.

First, to Slide 10, and as Jim mentioned earlier, we delivered a record second quarter performance, with further growth across our key financial metrics. Our Q2 adjusted EBITDA of approximately $2.5 billion was 9% ahead of the prior year, driven by favorable underlying demand and positive pricing as well as strong contributions from acquisitions and synergies. As you can see, we also delivered 70 basis points of margin expansion, further extending our 11-year history of consecutive margin improvement. This really demonstrates the mindset of continuous business improvement across CRH and the relentless focus on operational performance that Randy touched on earlier.

Moving to Slide 11, where I'll briefly update you on our capital allocation activities. First, to M&A, where year-to-date, we have invested approximately $1 billion on 19 value-accretive acquisitions, strengthening our market-leading positions in attractive growth markets. Our pipeline is strong and our uniquely connected portfolio provides us with multiple opportunities for further growth in what remains a very fragmented industry. Through Q2, we've also invested approximately $700 million in growth CapEx, leveraging our size and scale to fully capitalize on the attractive growth opportunities that we see across our markets.

For example, we are modernizing 2 of our largest aggregate facilities in North America, Cape Sandy in Southern Indiana and Marvel Cliff in Columbus, Ohio. These investments will expand production capacity to support future growth as well as drive further operational efficiencies through increased automation and energy optimization. At our San Saba coring in Texas, north of Austin, we are also investing to expand our capacity with new aggregate production equipment and rail infrastructure to better serve our customers. These kinds of investments are an excellent use of capital, low-risk, high-returning investments that will enable us to accelerate our growth, margins and returns.

We also continue to deliver significant accretive returns to shareholders in the form of dividends and share buybacks. In line with our strong financial position and policy of consistent long-term dividend growth, the Board has declared a quarterly dividend of $0.37 per share, representing an increase of 6% on the prior year. Through our ongoing share buyback program, we have also repurchased approximately $800 million so far this year. And today, we are commencing a further quarterly tranche of $300 million to be completed no later than November 5. Since the inception of our buyback program in 2018, we have returned over $9 billion to shareholders, representing 22% of our shares in issue at an average price of less than $49 per share.

These returns, while maintaining a strong and flexible balance sheet, reflect our disciplined capital allocation strategy. Overall, it's been a busy year so far with approximately $3 billion of capital allocated to growth investments and cash returns, demonstrating our focus on the efficient allocation of capital to maximize value for our shareholders. I will now hand you back to Jim.

Thanks, Nancy. Turning now to Slide 12, and our agreement to acquire Eco Material Technologies, a leading supplier of supplementary cementitious materials in the U.S. This proposed acquisition enables us to expand our cementitious products offering to our customers while also expanding our customer base, putting us at the forefront of the transition to next-generation cement and concrete, both essential materials with strong growth tailwinds. Together with our existing cement operations, the addition of 10 million tons of high-quality SCMs would significantly strengthen our position as a leading cementitious player in North America with approximately 25 million tons of combined annual production.

This is an excellent strategic fit and highly complementary to our existing platform. It will create a unique national distribution network enhance our innovation capabilities and uniquely position us to better serve our enlarged customer base. By combining our 2 businesses, we also expect to unlock strong future growth and synergy potential, representing an exciting opportunity to accelerate our cementitious growth strategy and deliver a tremendous amount of value for our shareholders. Subject to regulatory approval and customary closing conditions, the proposed transaction is expected to close in 2025, and we will keep you updated as that progresses.

I'd now like to revisit our strategy and how we are uniquely positioned for future growth. On Slide 14, we have highlighted some of the key benefits of our proven strategy and uniquely connected portfolio. As the largest building materials company and the leading infrastructure player in North America, operating across 2,000 locations in 48 states and employing approximately 50,000 people, the size and scale of our business is simply unmatched. By combining our materials, products and services across the construction value chain, we are able to maximize our profitability and better serve our customers' needs.

There are also significant efficiencies in operating a connected portfolio, including enhanced production planning, yield optimization and logistical benefits, all of which result in lower capital intensity, greater asset utilization and higher returns. Our scale, combined with the connected nature of our business, provides us with superior growth opportunities, multiple avenues to grow both organically and through acquisitions. Our strategy has also proven to be resilient through the cycle, benefiting not just from our scale and national footprint, but also our agile and flexible cost base as well as higher exposure to publicly funded infrastructure, a large growing market and a key focus for our business.

Let me give you an example of this in action on Slide 15 with a deep dive into our roads business. We are the largest road paver in the U.S., operating across 43 states, a unique network carefully built out and put together over 4 decades. Across our business, we complete approximately 4,000 projects per year with each one typically executed in less than 90 days. And with roads that need resurfacing every 4 to 6 years, it is a highly recurring revenue stream.

Over 90% publicly funded, it is predictable, resilient and more consistent through the cycle. Our fully connected roads offering enables us to not just provide the aggregates, but the mix designs, the asphalt and the paving capabilities, value-added products and services that are essential to a finished road. We also have the capability to buy and store up to half of our annual liquid asphalt needs to our unique winter fill procurement program. This is a key competitive advantage, which provides us with security of supply and certainty of cost ahead of the upcoming paving season, enabling us to lock in margin on our order book and derisk our business.

It not only provides us with the ability to procure a key input for our roads business at a favorable off-season rates, but also enables advanced blending capabilities, which we can customize for the specific needs of our customers. Our paving operations are almost fully self-supplied by our own high-value aggregates and asphalt, providing a key route to market for our materials. It is also less capital intensive, delivering higher cash generation and returns. As a simple example, starting with an assumed $10 of cash gross profit per ton of aggregate.

By combining our best-in-class aggregates operations with our liquid asphalt capabilities, our asphalt manufacturing and decades of commercial, operational and technical expertise in road paving, we can convert that $10 into $60, a multiple of 6x compared to supplying aggregates alone. That's what is unique about our connected road offering. We create and capture profit at each step of the value chain. This is just one example of how our strategy enables us to compound value for our shareholders, maximizing profits, cash and returns while also providing superior optionality for future growth in what remains a very fragmented market.

Of course, we are also able to provide all of the infrastructure that goes around and underneath a road, including the critical infrastructure systems needed for water, energy and communications networks, highlighting the importance and benefits of our uniquely connected portfolio and the value add we bring to our customer offering. Before I provide you with an update on our financial expectations for the full year, let me share our latest thoughts on the macro outlook across our markets. Turning now to Slide 17 and first to infrastructure, our largest end market, Here, we expect demand in the United States to be underpinned by the continued rollout of state and federal funding.

As Randy mentioned earlier, less than 40% of the IIJA highway funds have been deployed so far, highlighting the significant runway that lies ahead. In our international markets, we expect a robust demand in infrastructure to continue, supported by significant investments from government and EU funding programs. In nonresidential, we expect continued positive momentum across our key markets, supported by large-scale manufacturing and data centers. In the residential sector, we expect new build activity in the U.S. to remain subdued, while repair and remodel remains resilient.

In our international markets, we expect the residential sector to stabilize with structural demand fundamentals supporting a gradual recovery. As we have said in the past, we believe the long-term fundamentals for residential construction remains very attractive, supported by favorable demographics and significant levels of underbuild. 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 connected portfolio. In summary, the overall trend is positive for our business.

Our proven strategy and leading positions of scale in attractive higher- growth markets, together with our strong and flexible balance sheet, leaves us well positioned to capitalize on the strong growth opportunities that lie ahead. Turning to Slide 18. And against that backdrop, I am pleased to say that we have raised our financial guidance for 2025, reflecting another strong quarter for CRH and the continued execution of our strategy. Assuming normal seasonal weather patterns for the remainder of the year and no major dislocations in the political or macroeconomic environment, [indiscernible] we expect full year adjusted EBITDA to be between $7.5 billion and $7.7 billion, a 10% increase at the midpoint.

Net income between $3.8 billion and $3.9 billion, and diluted earnings per share between $5.49 and $5.72. Altogether, this represents yet another strong year of growth and value creation for CRH. Before we turn over to Q&A, I would like to leave you with a few key takeaways. Our unmatched scale, combined with our connected and resilient portfolio continues to deliver superior growth, and we are strategically positioned to capitalize on key secular growth trends across our markets. We are relentlessly focused on performance across our business day in, day out to deliver higher profits, margins, returns and cash, and our mindset of continuous business improvement underpins our industry-leading results.

We've spoken in the past about the significant financial capacity we expect to have at our disposal, approximately $35 billion over a 5-year period. Our financial strength and decades of experience identifying, acquiring and integrating businesses is unrivaled, and we have a strong pipeline of growth opportunities in front of us. And finally, through the disciplined and value-focused allocation of our capital, we have a proven track record of compounding earnings growth and creating shareholder value. So that concludes our prepared remarks today.

I will now hand you back to the moderator to coordinate the Q&A session of our call.

[Operator Instructions] We'll take our first question from Anthony Pettinari with Citi.

Regarding the full year guidance raise, I was wondering if you could talk a little bit more about the drivers of the increase and maybe any further detail on the underlying assumptions, maybe how those have changed from last quarter?

Anthony, thanks for the question. Maybe at the end, I might just get Nancy to come back in on maybe some of the scope, puts and takes on the guidance, yes. really happy this morning a strong Q2, Anthony, with EBITDA up 9% and margins up 70 basis points. And that's despite what was challenging weather across the businesses really. And weather really was kind of was unhelpful in the context of a lot of start-stop nature to the weather, and that really disrupted the start to kind of more paving season.

But really today, happy to report our EBITDA and margins increases across all 3 divisions, both EBITDA and the margins up, but also all 3 divisions over 20% as well. And that really reflects some strong performance execution across the business. And with that, a strong first half performance and EBITDA up 10% year-on-year. Now if you look at the kind of underlying activity, what's driving that, infrastructure remains robust still for us.

We have less than 40% of the IIJA bill yet spent. And if you look at the non-res side, we're particularly busy on data centers and a lot of the kind of high-spec manufacturing from the onshoring and reshoring. And given the scale and presence of our business, there's not really many large projects across the country that we are not touching in some ways. And that's not just our ags or our concrete or cement, but actually, a lot of our infrastructure projects -- products to in the kind of water, energy and communications side, and we're often the very first people on those sites.

So when we got to the end of the June, our backlogs are good. They are good in terms of volumes, they're good in terms of margins. And we saw that particularly in July. When the weather started to cooperate, July volumes are up double digits in terms of aggregates and a dealer asphalt with a really strong recovery in our organic volumes in July.

So once the work was there -- sorry, once the weather cooperated, the work was there to be done. And it's really those kind of inputs that's given us the confidence on the full year guidance and looking forward to another year of double-digit growth in EBITDA. In fact, when you exclude the kind of incremental land sales we had in Q2 2024, we're up 12% for the full year, we're guiding at the midpoint, and that's stepping off what was a record 2024. So a strong upgrade mainly organically led and on the back of a good Q2 and a good H1. Maybe, Nancy, do you want to maybe give some of the puts and takes on the scope?

Sure, Jim. And so we really previously guided to M&A contributions of about $320 million of EBITDA this year. And since that last update in May, we've had a further 11 bolt-ons. So with that partial year contribution, we now expect about $340 million contribution from the M&A.

And just note, too, that, that guidance does not include the Eco transaction that's still subject to regulatory approval and has not closed.

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

Dig again just a little bit deeper on the guidance and expanding on the last question. Could you update us more specifically on what you're expecting for U.S. cement and aggregates for the full year, specifically on the volume and pricing for both segments there because they both seem to be trending pretty strong.

Yes. Good question. Thank you for that. Randy here.

When we look at Q2, our underlying ag volumes were up 5% and pricing up 4%, but our mix adjusted basis, up 7%, which, going back to Jim's comment, it really probably reflected more of the weather and the stop- start nature of the business. So when we look at the full year and the underlying backlogs, we would be right in line with what we said at the end of Q1, which was the expectation of kind of mid- to high single digits in terms of pricing. When you look at cement, I'm really pleased to see kind of the work the teams have done there. Volume is up 1%, pricing up 2%.

I mean there certainly are regional differences in terms of the pricing environment. But what I like in terms of our business is really the portfolio where we play in the specific geographies. I think that's a strategic advantage. So happy to see progress through the first half of the year.

And I'd say for the balance of the year, very similar to what we said at the end of Q1, which was volumes low single digits and pricing low single digits. But that's really supported by the backlog. So it gives us a lot of comfort. Jim spoke to that, both on a volume standpoint and margins.

So really good visibility for the balance of the year. So really expect a continuation of the good progress we made in H1. And I think the bottom line is, and you would know us well enough, it's all about kind of growing our margins. So really happy with the position we're in and expect another further expansion of margins as we go through the balance of the year.

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

Focusing on the next highway bill and just overall federal infrastructure funding, those states have done a really great job of fundamentally changing tax structure, but still, we're looking forward to that next highway bill reauthorization. What we are hearing is that the bill is going to be a little bit more focused on traditional funding programs, the roads and bridges. But could you give an update on current trends and prospects for the replacement of the bill, both in terms of just the magnitude and also the mix.

Yes. Thanks for the question. I guess, much in line with what you outlined, we're hearing very similar things. But I guess let me take a quick step back.

The current IIJA, and Jim talked about this, less than 40% has actually hit the street in terms of spend. There's been another 20% that has been obligated. So I think in terms of historical look back on previous legislation, a very similar pattern in terms of the distribution of the dollars and much what we expected. I think everyone, at least from our standpoint, it was a 5-year bill.

We expected it to be 7 years to deploy the funding, and it seems like it's headed in that direction. To your comment about the next bill, I think, number one, I think there is a very supportive environment on both sides of the aisles from a legislative standpoint, right? It's historically been a bipartisan issue. I think what's encouraging, and Chairman Graves kind of addressed this in some of the early comments and potential framework of the bill, yes, there will be a higher concentration from what we understand in and around the surface transportation piece of that, which is it really works to our favor certainly from the connected nature of our business.

But I think more importantly is, across the aisle, there is an understanding that they're going to have to address a new funding mechanism. And that's encouraging from our standpoint is get clarity around where that revenue stream is going to be something that's more sustainable in the long term. So I think the pieces, the early conversation, early momentum is coming together. I mean you have an administration certainly that understands the value of building, understands the economic value that's driven by clarity around both federal and state funding.

So in that kind of environment, I think we're going to hopefully make some good progress in early days to get clarity around the bill. And really just to wrap up, and you said it Kathryn, I'm certain the states have done a very nice job over the last -- call it the last 5 to 8 years in terms of taking a higher level of responsibility and being very targeted with their funding. So that combination with state and federal funding, I think, gives a clear picture in terms of long-term underlying demand.

That's very helpful. And just a follow-up. You noted in the release on green shoots and residential repair and remodel. And I don't want that to get lost and now there's a lot of focus on infrastructure with CRH. But could you just give a few highlights in terms of what you're seeing more specifically with the greenshoots resi or not.

Kathryn, Jim here. I suppose we ever seen that most of them would have called it out in the last 2 earnings calls. Firstly is in our International division in kind of Central and Eastern Europe, really on the back of a more aggressive cut on the interest rate cycle in the euro zone area. So we're certainly seeing it there.

Again, from a U.S. perspective, it's very, I would say, location specific. But I think the real challenge is with the 30-year fix, still 6.6%, it's not a demand issue. It's really an affordability issue on the new res. And I think once we begin to see that hopefully, a cut on the interest rate cycle on the dollar, that will start to bring true in terms of residential starts in the U.S., but you're probably talking into the -- realistically from a significant impact, probably talking in the back end of 2026 before we start to see that.

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

I'd like to ask about M&A and also the upcoming Investor Day. Just in relation to M&A, can I ask a little bit more about the Eco Material deal. You might start lying your rationale and any further detail you can provide on the financials of that company. And then maybe secondly, you've obviously transacted a number of bolt-ons year-to-date.

Is there any further color you can provide on those or any update you can provide on the acquisition pipeline itself? And maybe just in regards to the Investor Day, a quick one. What should we expect from today or what should we anticipate from you guys out there?

Ross, Jim here. Yes, absolutely. Maybe first, take as they came first in terms of Eco yes, really pleased to have announced the Eco Material deal last week. We have been -- we've known Eco along -- many years, right?

And we're actually one of their biggest customers. We know the management well also. And as you know, kind of a key part of our strategy over the past decade is really making sure that we're deploying capital in what are high-growth markets and then within those markets, trying to make sure that we're deploying that capital in areas and sectors that have strong secular tailwinds. And that's exactly what this is in terms of the supplementary cementitious materials or SCM.

SCM when you look at the total U.S. cementitious market, it's about $135 million. And within that, the SCMs are the fastest-growing part of that segment. And we estimate that the actual SCMs are going to double in size between now and 2050. Now we identified probably, well, maybe 10 years ago, right, that the U.S. cementitious market was going to be a high-growth market, but also crucially, a market with a structural deficit. The U.S. needs to import about 25% of its annual cement requirement.

And as you know, the last kind of greenfield capacity. New capacity that was added was over 15 years ago. So over the last 10 years, we've been kind of very carefully and strategically building out our U.S. cementitious position. We started that with Ash Grove back in 2018 is probably one of the best acquisitions we've ever done in CRH.

And after that, we kind of bolted on initially in Florida, and then last year with the Hunter acquisition in Texas, and all of those deals, right, have been excellent, high growth, high margin, high returning and really value accretive acquisitions for CRH. And in that context, Eco is another really strategically important acquisition for us, right? It was a unique opportunity to acquire a leading supplier of SCM with 10 million tons of annual production, which is going to increase over the next number of years. That's a 60% increase in our cementitious capacity in the U.S., right?

So very significant from that perspective and takes us to 25 million tons. It's also highly complementary with our existing business. and that kind of gives us that ability to unlock strong future growth and also good synergies, which I might ask Randy in a second to touch on. And then finally, Eco because of their really strong innovation capabilities really helps to put CRH at the forefront of the transition in the next generation of concrete and cement in the U.S. So maybe I'll ask Randy just to comment a little bit on how it's going to -- the complementary nature and the synergies.

And maybe at the end, Nancy, you might come in just in terms of the valuation aspects of the deal.

Yes. As Jim said, we're super excited to have Eco as part of the group. I mean, I think you called out a couple of things there specifically. It is around growth.

It's around what we can do in terms of value creation. And and Jim talks about the capacity expansion of north of 60%, which is important, but it really is participating in the fastest element fastest segment of the cementitious business. When I look at it, what's exciting about it, it certainly is the national footprint, both from a manufacturing standpoint and a distribution standpoint. And when you overlap that, what we've done and built over the last, call it, 7 years in the cementitious business, we have -- we'll have north of 200 locations to be able to serve the markets more broadly.

Our customer base, for sure. I think there's a really unique offering for them. We can provide them with a wider range of products and there's cross-selling opportunities. But certainly from our own standpoint, we are a big customer of Eco, but the opportunity for us to continue to consume internally more of the cementitious materials, not just in our readymix business, but certainly in our concrete downstream businesses as well.

And you would expect, and I would expect to see certainly opportunities in and around the operational side to learn from both sides. We'll bring some things to the equation, great team with Eco. They'll bring some insights to us in terms of how do we drive operational efficiencies. Obviously, I'll talk a bit about the commercial opportunities, but very similar to the Hunter acquisition in Texas, where we were able to take an asset and maximize the network we had in servicing that particular market, in terms of manufacturing sites and more importantly, logistics.

That's what's going to happen here, too. So it's the opportunity to not only service our customers to a higher level, it's about getting the best cost position to serve those markets. And they've done a terrific job in building out a very substantial rail network. We'll be able to capitalize on that.

And Jim talked a little bit about it. I think the other bit certainly, probably the most important thing is a great team. They have a tremendous amount of experience, deep relations in those local markets, leading edge in terms of innovation and technology. So there will be a tremendous add to our existing business, and we see a long-term future in terms of not only growth, but also the opportunity to create higher levels of value.

On the valuation piece, the Eco business has delivered really strong growth in the last few years, and they've got some quite significant new capacity coming online in the next 12 months. So when we think about the valuation equation, it's really high single digits post synergy, multiple, which is quite comparable to valuations we've achieved on similar acquisitions we've made in the past. So right in the fairway of our typical work. and it's very consistent with our track record of value-accretive M&A. And really, we like the deal.

It's got attractive returns and an attractive cash profile and alongside low capital intensity. So collectively, we're quite excited about the transaction.

Thanks, Nancy. And Ross then you asked, generally, just in terms of M&A activity in general. Yes, we've had a really good start to the year, 19 deals, $1 billion. And that's not an unusual run rate for us.

Last year, we did 40 deals last year, but the 19 deals, total $1 billion at really attractive entry multiples is what I'd say. And it's been a busy start to the year. And what I'd say is that the pipeline is good, too, for the remainder of the year, right? But maybe just on them in general, there's no real change to our strategy, I would say, in terms of M&A.

We are, based on -- look at the number of deals that we would do typically in terms of bolt-on, the tuck-in deals with the reference compounder capital, right, in the building materials space. What we're really trying to do is trying to focus on acquiring value-accretive businesses and deploying capital in faster-growing markets and particularly in sectors where scale matters, whether that's aggregates, whether that's asphalt, whether that's cement or whether that's infrastructure. And then having both the business, we really focus on how we connect them into our connected portfolio because that's where we really drive on the returns and performance of the business.

So maybe as an example, Randy, I don't know if you want to talk about a couple of the deals we've done in the first half of this year?

Yes. I think one of the things that stand out in terms of the underlying deal or 19 deals, many of those have been originated by our local teams. So they're responsible certainly for driving underlying performance in their markets, but also around growth. And so it's terrific to see those relationships come to a point where we can bring some companies into the family.

I may be call out too because it talks about the connected nature of the portfolio, Talley Construction, which is in and around Chattanooga, Tennessee, a high-growth market, servicing not only just Tennessee, but portions of North Carolina into Georgia, but it's an integrated business. So very much resembles our portfolio and connect it into an existing platform. So you can see the opportunity to continue to build the growth aspects and also better serve our customers there. JMAC Resources in the Pacific Northwest, servicing Washington, Boise, Idaho, connected business from aggregate asphalt into the paving side of the equation, really focused in and around roads.

Jim talked about in the opening comments about the road segment and our ability to kind of multiply earnings in that revenue stream. A great example of that deal coming together and the deal that we've worked on for some time from a relationship standpoint. But I also think when you think -- look about the last 12 months, we've added roughly 15 million tons of aggregate at very attractive multiples. And it is about the connected nature.

So it's not just the ag, it's the other downstream businesses that are important to us. And I think just to complement what Jim said, the pipeline is strong. So we see a lot of opportunities. We have optionality in terms of where that growth is going to come from, but excited about the way we continue to connect our portfolio.

Yes. Ross, as Randy said, kind of pipeline is strong, but we're not going to lose that financial control and discipline either, right? When we look at every deal, right? Lastly, maybe just you asked about the Investor Day, yes, really looking forward to coming up at the end of next month in September.

It's 2 years since we listed on the NYSE. So I think it's kind of a timely update from that perspective. I think it's going to give us an exciting program planned for the day. It's going to be -- we're going to have a lot of time to talk in more detail and do a deeper dive into our strategy, either going to have -- as an example, we're going to unpack a bit more about our Roads business and about our water infrastructure business.

We're also going to have an opportunity to talk about where we're going to be deploying capital into the future, right, as an organization. It's going to be an excellent opportunity to meet the wider management team as well across the business. And then also, we're going to talk about what our midterm growth ambitions are for CRH. So as I said, a good program, plenty of interaction and lots of opportunities for Q&A on the morning.

So looking forward to catching up with everybody.

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

Welcome abroad, Nancy. Jim or Randy, maybe like the -- we appreciate the update on Road Solutions. Maybe you could share how maybe Road Solutions and your critical infrastructure business. How does that pipeline look?

Have you witnessed any hesitancy or delays in lettings or have some of your customers maybe on the private side accelerated those plans. And in that integrated model, that also plays to some of the reshoring infrastructure opportunities that you're working on across the board?

Yes. Sure, Mike. Yes, listen, we set out this morning, we give, I guess, a bit more detail about the roads business, right? And what you see in that road business is really the the resilience, the predictability of it. 90% of it comes from public funded and it's really across 43 states, about 4,000 jobs a year.

So it's really distributed from a risk perspective at the start of every year. When you get to the 1st of January, you have pretty good visibility as to what you should expect in terms of kind of recurring revenue given the nature of the resurfacing of roads that's required typically every 4 to 6 years, right, from that perspective. In that light, we called it out, I think, on the guidance point. Our backlogs are good at the end of June.

And they're particularly good, I guess, because of the weather interrupted nature as well of the Q2 performance, but also the underlying activity. We're still less than 40% of the IIJA spent at this stage. So we're very much in the ramp-up phase of that. And as we got through into July and the weather cooperated, we get out there and start paving the road from that perspective.

So we're not seeing any delays or push backs some projects from that perspective. And I think we're looking forward into '26 as well and the continuation of a ramp-up of activity from the IIJA perspective. Now from our perspective, it's not just our kind of aggregates or our liquid or asphalt from that position, we're also in there with our infrastructure business as well because underneath or around every road, you have your water infrastructure to manage storm water, you have communications, you have energy. So that really plays into the sweet spot of our U.S. and Americas infrastructure business.

So it's that connected nature of the portfolio, being able to offer the customer kind of a valued solution from that perspective. And that's what really kind of drives the the performance, the resilience and the consistency of the business.

Your next question comes from the line of Shane Carberry with Goodbody.

Just 2, if I can, please. The first one, just with regards to Adbri? You mentioned in presentation, it's performing well. Could you give us a little bit more color in terms of how it's performing versus your expectations?

And how things have evolved from your perspective in terms of the extent that the opportunity that you think is out there in Australia? And the second one is just one of the things that I found really impressive in the results was just margin expanding in all 3 divisions. Could you give me a little bit of color on some of the key drivers of that cost control? Was there anything different relative to normal?

Or does it just feel like business as usual in terms of tight cost control?

Yes. Sure, Shane. I'll take maybe the first and Brian might give -- Randy a bit of color on a lot of the kind of performance initiatives that drive that margin expansion quarter after quarter. Yes, firstly, Adbri is almost 12 months we did the acquisition down in Australia.

It's been a really good start and I spent a week down there 2 weeks ago as in all the locations and the team. It's been a good start. It's trading ahead of our expectations. That's really coming -- going back to that point that we actually touched on earlier about Eco, what we bring to a business, right, as CRH.

We acquire businesses and make them better to whether it's operational excellence, commercial excellence, procurement, et cetera. And it's across all those parts, right? And when you look as well against the kind of the macro outlook for Australia as we go forward as well from where we are right now, we're looking for, in addition to I guess, or improving the performance of the business, I think we're looking at good tailwinds as well for the next number of years there, whether that's on the infrastructure through energy and defense expenditure, recovery on the residential cycle, too. So a good start with Adbri.

We also did a nice deal in Civilmart, which is basically the leading Australian infrastructure business, again, in water, comms and energy, very similar to your U.S. business. And both of them have started trading well and ahead of our expectations. Randy, maybe on the performance initiatives that are driving the quarterly margins.

Yes. I guess it's a great question because it's different almost every quarter in terms of what levers we need to pull. I think the teams this year, in particular, I'd go back to the comments about the stop-start nature of the business, did a tremendous job from an operational -- from a production planning standpoint, kind of scheduling the proper shutdowns, the R&M that's required to make sure that we're meeting our customers' expectations. It's managing both the sales demand and the underlying production planning on a monthly basis.

I think the teams did a tremendous job there. I think you got to go back maybe a number of years where, over time, we variabilized a lot of our cost base in all of our different manufacturing sites. So the ability to continue to focus on that has been a critical element of our performance. I think the other bit that we talked a little bit about that Nancy highlighted in some of the comments at the beginning was really our targeted effort as well in and around development CapEx, taking existing businesses, making them better from really the right kind of investments, whether that is through automation, technology, anything that we can do to enhance the underlying performance of the business we charge our local companies to come back with concepts and ideas around there.

So it's a combination of daily practices around operational and commercial focus, targeted CapEx. And I'll give a shout out as well to our procurement organization. We've certainly done a tremendous job over the last decade, making that a real global focus and delivered -- continued to deliver higher than our expectations would be in many of those areas. So a good overall team effort for the first half of the year.

And our last question comes from the line of Garik Shmois with Loop Capital.

Two quick questions. First, are you seeing any greenshoots in outdoor living at all in the Americas? Or is it mostly confined to Europe with respect to the -- maybe nascent improvement in R&R? And then hoping you could speak on aggregate pricing in the quarter, you called out mix.

I'm wondering if that's more product or geographic mix? And are there any mix impacts in the second half, we should think about is there an impact in shipments coming through and I'm wondering if there's any similarities for you guys?

Yes. Thanks, Garik. Maybe 2 questions there. I'll take the outdoor living one and might ask Randy a bit more color just in terms of the the mix adjusted pricing in Q2. Yes, in terms of outdoor living, I'd say it's been a pretty resilient performance, Garik.

It stepped up a particularly high levels if you go back on the kind of pandemic years, but it's maintained at that level. I'd say areas which have been kind of robust and growing is kind of in our premix products, in particular, right? That's been pretty strong for us. So quite a resilient performance.

It is the part of our business, which is most exposed to the res side, but it's more on the repair side. So we're pretty pleased with the performance, resilient in general and then kind of pockets of growth, mainly coming from the kind of premix side of it. Randy, do you want to...

Yes. Looking at the ag pricing, I think there's -- it's not really a geographic issue. It's more of a weather impact for the first half of the year. Actually probably delivered on what we would expect in terms of the mix adjusted at 7%.

What we would tend to see premium products going into asphalt, ready-mix concrete, the downstream businesses. We'll see that come back as the year progresses and activity levels pick up. Jim talked about kind of a step up in July in terms of not only shipments, but we also saw a higher percentage of premium products. So we feel good about where the pricing is now and certainly in line with what we would have called out earlier in the year around mid- to high single digits in ag pricing.

Thanks, Garik. Well, thank you all for your attention. And as always, if you have any follow-up questions, please feel free to contact our Investor Relations team. Really looking forward to catching up with everybody again at our Investor Day in September, where we'll have the opportunity to discuss the future growth and value creation opportunities we see for our business in the years ahead.

Thank you to everybody, and have a good day.

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