CRH plc

Good morning. My name is Albert Manifold. I am the chief executive of CRH. I'm talking to you this morning from our office here in Atlanta. And I'm joined here this morning by two of my U.S. colleagues, Randy Lake on my right, who is the head of our American Materials business, and also Keith Haas, who heads up our global building products business. We're also joined today by our colleagues in Dublin. Selin Murphy, our CFO, joins us there. And he, too, is joined by Frank Heisterkamp, who is director of capital markets and ESG and also Tom Holmes, who is Head of Investor Relations. And we're going to take you through our results this morning that we published earlier on. But before I do so, I just want to say a short few words to my colleagues in CRH, the almost 100,000 people that worked through the course of last year, a very challenging and difficult year for us personally and professionally, and to thank you all most sincerely for the hard work and dedication and indeed sacrifices you made to help deliver for us, which were record results. Of course, we're not through the pandemic yet. We hopefully will see the relief come to us during the course of this year as science comes to help us. However, all I can ask is that all of us respect the protocols, try and stay safe and look after each other until this situation unwinds as best it can. So over the next 40 minutes or so, we're going to go through a presentation which takes you through the background to the performance of our business in 2020, how we've delivered those numbers, what was behind us, and indeed setting out for you some sense of what 2021 looks like, even though it is very early on in the year. We'd also like to take a little bit of time to explain to you some of the changes that have been happening in our business over the last 10 years and see how that has changed the face of CRH and also sets us up for the next stage of growth in our company. As usual, at the end, we'll have questions and answers a little bit different to before because we're not in a live room anymore in the current climate. Of course, everything is remote. but we'll talk about that later on. So first and foremost, if I can go on to the first slide, just to set out some of the key messages that we're talking with regard to CRH on slide two. A very challenging year for us across CRH. What we've seen is a slowdown in our businesses, not necessarily because of a slowdown in volumes, but what's actually happened is we've seen that significant restrictions in our life and in our business and our ability to get to work principally in Western Europe. Of course, there were lockdowns for several weeks and indeed a couple of months in some of our main markets. We also saw it in Central and Eastern Europe as well, although not as much, where it was quite resilient. And here in North America, particularly in the United States, where construction was deemed to be a necessary activity. It still slowed down activity levels and it meant that our top line revenues were backed by about 2%, but only 2%. But of course, we worked within our businesses this year to try and deliver the best results we possibly could. And in 2020, I'm happy to report yet again, it was another year of advancements, both in profits, margins and cash, where all three were ahead again against a backdrop of a declining top line, which was a really strong and robust performance. Of course, higher profitability for us converts into higher cash. And that strong cash is utilized and you can see it in the strength of our balance sheet. Our balance sheet now is at the strongest it's ever been. Net debt to EBITDA is at 1.3 times. And that sets us up very well, particularly so when measured up against the significant pipeline of opportunities we see going ahead of us in the years ahead. But we'll talk more about that later in the presentation. Also, that cash being put to good use for our shareholders, returning cash to our shareholders. We've announced this morning an increase in our full-year dividend to 115 cents, a 25% increase in dividend. recognising not only the strength of our cash flow last year, but also reattesting to the confidence we feel about the repeatability of the performance in the years ahead, and the strength of how we feel our cash in our business and the cash generation of our business will support all aspects of our cash allocation as we go forward, and we'll talk about that during the course of the presentation. Also, we've announced a continuation of our buyback programme, a recommencement, I should say, where we're announcing our ambition to spend up to about $300 million on buying back our stock between now and the end of June. All of the performance this year has been a result of the hard work during 2020. But of course, we've been working for a number of years in the reshaping and repositioning of our businesses. That also has helped deliver, and we're going to talk about that. We've also been working on the continuous business improvement within our business. That has been a huge part of how we deliver within our businesses and nudging on margins and performance on a year-to-year basis. but also there have been some crucial changes in terms of the position of our businesses. We used to just produce base materials. We've now evolved our business over the last decades to be one that focuses very much on integrated building solutions, providing better options and solutions for our customers. And I want to expand upon that at the back end of the presentation. So for the moment, I'm going to pass you back to Senan in Dublin, who's going to take you through some of the key highlights of our financial performance in 2020. Senan?

Thanks, Albert. So I'm turning now to slide three. And as you can see set out on this slide, we have set out our financial highlights from the results announcement this morning. I guess in summary, for me, it's been a very robust performance against what has been a very challenging trading environment over the last 12 months. You can see that we're reporting a sales number of 27.6 billion, which is a decline of 2% over last year. And that really reflects the negative impact that COVID has had on activity levels in many of our markets, but particularly during the second quarter. Despite that decline in top line, we're reporting record profits today. 4.6 billion of EBITDA, which is a 5% increase over what was already a very strong performance in 2019. That earning performance really is a testament to the real focus and quick attention to preserving our profits over the course of the last 12 months. That strong profit performance shows up as well in our margin. Another year of margin improvement. 120 basis points of organic growth in our margins over the last 12 months. That strong profit performance also helps us to significantly increase our earnings per share. We've an almost 20% increase on a pre-impairment basis over last year. I'm pleased to say that we have had another very strong year of cash generation. $3.9 billion of cash from our operations all across the group. And again, we'll talk about that in more detail later. That strong cash generation has further strengthened or underpinned the capability within our balance sheet. We've now got a year-end position where the net debt to EBITDA ratio is at 1.3 times that leverage level. is the lowest that we've seen certainly within the last decade across the organization. And it gives us capacity to be able to create more value as we go forward. At this point, I'd like to hand back over to Randy, who's going to share with you a backdrop on the North American market. Maybe also update you on the trading performance in our materials business in North America. Keith will pick up and update you on the trading performance in our building products business. And Albert will then update on Europe.

Thanks, Senator. If you turn to slide five, I guess if I had to use one word to describe construction demand in 2020, I'd say resilient. Construction activity in the northeastern and northwestern portion of the United States, along with Canada, were the regions that were primarily impacted by the pandemic restrictions that were put in place, particularly in the first half of the year. Our businesses in the central, western, and southern part of the United States were far less affected. As you know, about 50% of our materials business is exposed to infrastructure, and we're pleased with the momentum we continue to see there. Although activity levels were slightly below 2019, that funding is underpinned by a strong bipartisan support at the federal, state, and local level. Moving to residential construction, new-build construction was robust in the U.S. Demand for new housing is really at multi-year high. supported by low interest rates, low inventory levels, and a continuation of the migration pattern we've seen to the western and southern portions of the U.S. Remodeling activity was strong as well, as we saw households and individuals redirect discretionary income to the improvement of their homes, and more importantly for us, improvement and building out outdoor living spaces. And really not a surprise to anybody that the non-res market was the particular market that was most heavily impacted. Lower levels of activity in the retail office and hospitality space were partially offset by good demand in warehouse, data centers, health, and communications. And despite that lower level of activity, and I would call it really a benign input cost environment, we saw good commercial discipline across all of our markets and product lines. And now turning to slide six to talk a little bit about America's materials performance. Really happy with and proud of the work the team did in 2020. Our production volumes in aggregate asphalt and ready mix concrete were below 2019 levels, primarily due to the restrictions I talked about on slide five. But our cement volumes remained intact and strong, roughly in line with 2019 levels. Really driven by an exceptional demand environment out west, offset a bit by lower levels of activity in Canada. And again, despite those lower levels of activities, our teams did a tremendous job in around commercial discipline, and that translated into margin improvement in each of the lines of business across our platform. But for me, when I look at 2020 and stand back, what really to me highlights the great performance has been the resilience of our business model and our operational agility. The ability for us to leverage our scale and our vertically integrated business model to adapt to the volatile demand levels that we saw on a micro market basis, and then to be able to flex our cost base accordingly, that's really what delivered the results you see today. A 10% improvement in underlying EBITDA versus 2019 levels, and a strong margin improvement of 260 basis points. Now certainly part of that margin improvement was a result of lower energy environment, but really the majority of those gains just came from better execution from our teams and the markets that we serve. And with that, I'll turn the presentation over to Keith to take you through building products.