TRG | The Bottom Line – 8/25

CRH this week reported an earnings beat with 1H’23 EBITDA of $2.5B vs. our $2.4B and consensus of $2.38B. The quarter played out largely within TRG expectations, with robust pricing momentum carrying the way as volumes balance overall strong demand with weather impacts. Margin growth (90 bps at the consolidated level) benefitted from pricing gains which management expects to continue momentum into 2024. CRH is “the largest beneficiary of unprecedented growth” in U.S. infrastructure spending (~40% of US sales) as the largest road builder and a full-service provider of road construction and utility infrastructure. CRH also noted strength in non-res mega projects (non-res 30% of US sales) being driven by onshoring activity that is a decade long tailwind. Management on its earnings call highlighted that these two areas are where CRH excels, delivering large scale and complex projects and being a partner throughout the process. CRH capitalized on multiple revenue opportunities throughout the project lifecycle and has been able to capture more margin dollars compared to lesser complex projects. We believe this is where the industry is going as projects become larger and more complex (design build growing in use, mega projects just beginning, etc.), with CRH able to see outsized benefits by contributing across the project lifecycle. The next big milestone will be CRH’s shift to primary listing on the NYSE on or around September 25th. U.S. investors are paying closer attention, which is starting to be reflected in its stock price, too.