CRH plc (CRH) Earnings Call Transcript & Summary

Hello and welcome, everyone to the CRH Investor presentation. My name is Cindy Coppola and whether you are here with us in the room today in New York or joining us on the webcast, we are delighted to have you with us on what is a historic day for our company, as we mark the transition of our primary listing to the New York Stock Exchange. We will be -- exciting agenda today for you and will be joined shortly by Albert Manifold, our Group Chief Executive to kick off our main investor presentation. This will be followed by the Q&A and then an opportunity for you to learn more about our business as we take you through some short breakout sessions. I will provide further information and the logistics for these breakout sessions, both here in the room and online after the Q&A. Before we get started, however, and for those of you in the room, I would like to point out the following health and safety instructions. Emergency routes are clearly marked and at the back of the room and also in the back on the foyer. In the event of an emergency, you will hear an alarm as well as a spoken announcement. Please make your way immediately to the easiest or the closest exit for you and they will be guided to a place of safety. There are no planned emergency drills today, so on this allotted time luckily. With that, let's get us started. Let's take a few moments to reflect on CRH's journey. Thank you. [Presentation]

Good morning. I'm Albert Manifold, as most of you will know. We are a company that's changing for a world that's changing and that change is around us here today. Welcome to New York, welcome to CRH's first day on the New York Stock Exchange and it's been a remarkable journey for our company. We were a small national company in Ireland 50-some years ago and over the last 5.5 decades, we transitioned to being a major global business. And in that time, we became de facto an American company. America now accounts for 75% of our profitability. And if you look at what's ahead of us in terms of the growth that we see in our marketplace, that's going to increase and continue. It's the natural progression of our company to continue to move here to the United States, none more so than our listing here this morning. We spoke about a month ago about how our business performed in this current year, to give you a sense of how we're doing. We had a record first half of the year. We gave our expectations for the full year. We'll talk about it later on. EBITDA is going to be up about 10%, continued growth across our margins, across our cash and across our returns, which to me is a sense check on a sound and solid business, the execution of our strategy. So the purpose of this morning is we are going to take you through an overview of our company. We're going to talk here for about 45 minutes or so. After that, we've got some specific experience stations that will allow you to take a deeper dive into our individual businesses to get a sense of what we do and why we are so excited about the opportunity here as we list here in New York. So I'm going to be joined on stage by my 2 colleagues, Jim Mintern, our CFO; and Randy Lake, our Chief Operating Officer. And together, the 2 of us are going to take you through what we think and look at about our business. So let me just look at the running order for today. As I said to you, first and foremost, we'll give an overview of what our business is, what we do. We want to explain 3 or 4 specific things to you that we think will drive the value of our business and substantial growth in the years ahead. First and foremost, we have a differentiated strategy. We come to New York in here, well -- why aren't you Vulcan and why aren't you Martino, why aren't you Heidelberg or why aren't you Holcim. We're none of those because we choose not to be any of those because we believe we found a better way that creates higher growth, higher profitability and higher returns. That's how I'm judged, that's how you're judged, that's how we're judged. That's -- and I will explain that and our differentiated strategy. We want to talk about our geographic positioning. We have thoughtfully plotted out where we do business and how we do business. And we will explain to you why we have chosen to be in certain markets in a certain way because again, it's all about growth and building up a strategically defensible, deliverable model. We want to talk to you about our strong track record of financial delivery. If there's one thing you can take away from this meeting today, the financial strength and discipline of CRH is embedded deep in our DNA. You couldn't get rid of it if you tried. We are here for shareholder value and for growth. We're also going to talk about the future, how we think about future growth. Where do we see our business going? Why we're excited to be here? Where do we see our markets going and how we're going to play in those markets, what our anticipation, what our excitement of the business going forward is? And lastly, to talk to you about what you should expect from CRH in the years ahead. So maybe just a quick summary and high level, just a broad -- to give an introduction as to who we are and what we do for those who perhaps don't know us as well. On the top left-hand side of the tableau here in front of me here, you see, over the last 50 years, we have produced annual TSR of 15%, that's pretty impressive. You can see our 2022 financials. You see that last year, we did an EBITDA of $5.6 billion. I already told you, we're up 10% this year. That's what you should expect from CRH. We should be a double-digit growth business year after year after year and we're going to explain to you how we see that coming through. You can see there, look at our EBITDA increase, the 5-year CAGR has increased EBITDA by 13%. So we're ahead of that aspiration, ahead of that 10% growth. I like 10% growth businesses. I like them coming through because you have certainty, you've got sustainability of the numbers, it drives cash generation. And as I talk about cash generation, CRH generates a significant amount of cash. We turn about $0.80 out of every $1 of EBITDA into cash. Our market cap is approximately about $40 billion. We're a big business. You know that. But big is not enough, you have to be good. We employ here in the United States, about 76,000 people. And currently, we make about 75% of our EBITDA is generated here in the U.S. So let's start to talk a little bit about our business for those who don't know us as well as they should. Well, what do we do? We take at the core, we start with basic raw materials, stone and we do things with that stone. We process it as we call it, we make big rock into small rocks, we turn stone into cement, we turn stone into asphalt, we turn stone into concrete and then we do more with it. And really, the idea of just making big rocks into small rocks or making cement, I think that was fine for businesses up to about 20 years ago. But the challenges of the world starts to appear and evolve in front of us. Climate change, labor constraints, people want their work done quicker, cheaper, then needs to be made more resilient. And that meant that we had to start thinking about how our products would be used in a better way and there was no one to turn to. Our customers are contractors, that's what they do. They put stuff together as architects will tell them. But Architects only know the art of the possible, [indiscernible] what the engineering and design capabilities of particular component parts of construction are and we do with the material science, with design knowledge, we have the technology, we have the engineering skills to combine together multiple parts of materials to create new products that don't exist and we have done that over the last 20 years and they exhibit themselves in Road Solutions. They exhibit themselves in Utility Infrastructure and indeed Outdoor Living, which Jim and Randy are going to take you through in a moment. We take and process the basic materials but we turn them into finished component parts that contractors can connect to put together the world of tomorrow. And in doing so, they're dealing with the challenges that we're faced with. They're building more resilient buildings. We're building quicker, with more recycled material, better quality. You can build in a factory, in a controlled environment, anything built in that environment is much better than hands put together in an artisan way, in a craft way, on the building side. And we're doing so with less labor. That's what we do. That's the differentiation for CRH. We take the materials and turn them into finished products. And we do so listening to our customers' problems because we solve their problems by turning them into products, we make the construction process easier and simpler for them. All of this is great but what does it do for us? Well, what it does for is what you're going to hear later on. We create higher profits, we have higher returns, we have higher growth and we have more cash and we consistently do that year after year after year. I'm going to go into further depth on that when we talk about our differentiated strategy.

So maybe starting with our essential materials business. As Albert described, we're really the leader and the largest producer of aggregate within North America and regionally #1 in key growth markets in Europe. And when you think about essential materials, it's really the backbone. It's the foundation of our integrated business. Those resources, specifically aggregate, they're finite, difficult to replace, very valuable. And together with the leadership positions we have in cement, they're heavily integrated into our downstream solutions businesses. When you think about those positions, there's operational and commercial benefits that result in kind of the magnitude of that platform, in that integrated model, it's really that demand pull-through. So during various economic cycles to be able to consume more rock or sell to a third party. It's improved scheduling, it improves quality control, it lowers rate the waste product. And so in totality, it just makes us more efficient. But I think primarily what these assets do is, they give us a unique position in the marketplace that we then can turn into trusted relationships and partnerships with our customers. A key component of our business as well is Road Solutions, it builds off the essential materials of aggregate. We're the largest road builder in the U.S., home of really the most extensive network in the world. And that market has benefited both at the state and the federal level from consistent, resilient public funding. And what's different about this space is that every road is different. Every road is unique. It requires different performance elements and different products that go into solving our customers' problems. And we have to adapt those essential materials with our products and our services to be able to get and deliver a specific product to our customers. And I think what's important here is, we play in the entire construction value chain, from design, engineer, manufacturing, installation, the maintenance and then ultimately, the recycling back into another product. And that creates certainly customer stickiness, a customer relationship that people have come to depend upon it. So it delivers a higher level of quality in terms of the project but also better value to our customers.

And I'd like to talk to you about our market-leading position in our Utility Infrastructure business. These are highly engineered systems that collect, protect and connect critical utilities. So think of water, storm water, wastewater, communications, energy. The products here are typically precast concrete products used in applications both above and below the ground. But each and every project that we undertake is unique. We're involved from the very start of the project, in the planning and design phase, talking to our customers, trying to understand their objectives, what the challenges are and trying to solve those challenges and problems with them and getting as many of our products as we can, specified on each and every job. The precast concrete products, they're fully integrated with our upstream essential materials but they're also very closely connected to our Road Solutions and our many jobs are offered together. This is one of the fastest-growing parts of CRH and has got strong sectoral tailwinds for many years to come. In fact, in '22, the top line organic growth in this business was 24%. We're also the leader in outdoor living, we own the backyard, with innovative and bespoke design products. And we've assembled a stable of industry-leading brands. From our Belgard concrete paving, to a moisture-sealed composite decking or Pebble tech stone pool finishes and more recently, our Barrette outdoor fencing. We entered this market in the U.S. over 40 years ago with our Belgard concrete paving. And it is now the referenced concrete paving product in the U.S., and it alone has a turnover of over $1 billion per annum. Again, our outdoor living is very closely integrated back up into our essential material, pulling through that aggregates and cement. And it has been one of the fastest-growing parts of CRH over the last number of years. And it has a real key strategic strength in the national footprint that we have across the whole of North America. We're going to have an opportunity later to learn more about these businesses and to meet the leadership team who run these businesses for us.

So I mentioned earlier on about our strategy is different. We're a different business because we choose to be a different business. I want to give you a broad overview of what we mean by that and what are the benefits of having a different strategy. Well, over the past decade, we've refocused our business away from being mainly a processor of basic materials. It's still a big part of what we do. In fact, CRH is the largest aggregate producer in the United States but we do so much more because we choose to do so much more. Over the last decade, listening to our customers, we have started to partner with our customers. And who am I talking about here? I'm talking about state DoTs, I'm talking about major corporations, I'm talking about the major contracting companies, some of the large retailers and listening to them as to what are the problems they have and trying to interpret their problems and see, can we help in any way for them to solve their problems. Well, actually, by partnering with them and thinking about their challenges they're faced with, we've been able to come up time and time again with complex solutions to the problems that they're faced with on a day-to-day basis. We're building upon our know-how about material science, how you can design concrete products, how you can put them together in an innovative way to do different things. There are things we are now doing with construction component parts that didn't exist a decade ago. Goodness knows, where it's going to be in another 10 years. And there's nobody in this space. If you just think about the Road Solutions business that Randy mentioned about earlier on. 10 years ago, we just sold rock, now we sell the whole road into 1 customer, 1 supplier, that's us. We do it time and time again with outdoor living. We do it time and time again with our infrastructure business. That manufacturing capability, the engineering skill set acquired over years and years of doing this brings us enormous credibility and experience to our marketplace. And it helps us deliver solutions for our customers, ready-made solutions for tomorrow, today. And to deal with the problems they have by doing it quicker, cheaper, faster and cleaner. So you can see how it delivers values for our customers. It also actually delivers significant value for our shareholders. Not only to do we deal with the problems of our customers across the value chain, all of this is driving higher growth in our business. Anybody who's followed CRH and Jim is going to take you through this in a few moments, for the last decade, we have had industry-leading top line and bottom line growth for a decade. Now we're not smarter than anybody else. We go to the same colleges. We're as dumb or as smart as anybody else but our strategy is different. And it's the model, the business model that is delivering this. We turn more of our profits into cash. We make higher returns. It's the model that is doing that and it's very hard to replicate because we've had 20, 30 years of doing this and in the last 10 years in particular. So we give higher growth, better cash, higher profits and higher returns for our shareholders. So let me give you a practical example. I referred to the road business earlier on. So if I am a pure-play aggregate player, I sell my stone once. I sell my thousands of tons and I dump them in the yard of my contractor, one sale and I walk away. But look at the lost opportunity because what that contract is going to do, he's going to go and buy bitumen from somebody. He's going to coat that stone with expensive bitumen and he's going to sell it as asphalt, there's profit there. Then what they're going to do, they're going to get the asphalt and sell it to a contractor who's going to lay that asphalt, missed opportunity there. Well, CRH doesn't do anything like that. It takes it stone, it buys in the bitumen, I'll have that, thank you very much, I'll make asphalt for you. Not only will I make asphalt of you, we're the largest asphalt maker in the world. And that means for your particular application, we can tell you what you want or what works best for you. And by the way, not only will we sell the asphalt, we actually want to lay the asphalt to make sure the quality of the work is done to the quality we expect. It's not just buying the material, it's putting in place that's crucial. So we provide the whole package, the whole road plus so much other ancillary work that we do. And in getting that 1 sale multiplied into 3 individual sales, we actually generate, as we show here behind you, 4x the profitability. And that happens time and time again across CRH in our different solutions business. And just think about the advantage of a DoT. So they've got to deal with A, to buy my stone; B to buy the asphalt; C, to contract, or I can deal with D, CRH. You know exactly who they want to do business with. So all of these are great words, you've got lots of people like me talking to you about what does that mean? That sounds great. Well, let's go behind -- some of the numbers behind me here. On the left-hand side of the slide, you can see here, pure players. They make 25% margin on average. It's a good margin, good business, we make about 20%. But look at the cash conversion, we turn more of our profits into cash. And you know what CRH do with their cash. They spend it wisely for you, our shareholders. Crucially, we make higher returns, we make about 70% higher returns. The one true judge of any investment that you have is the returns that you make. Those of you who are investors, those of you who advise investors, what's the 1 core metric you would choose? Returns, followed by cash, Returns, followed by cash. The differentiated strategy, this has come through over the years, shows that we have higher levels of returns, higher levels of cash and higher levels of absolute profitability. The size and scale of our business is immense. It's incredible. We're coming here for the first day, to the New York Stock Exchange. We're the largest building materials business in the United States. Our profits are more than the combined profits of the next 4 peers together, the names that you all quote to me, off the top of your head. And by the way, a decade ago, we were at the same level. So the absolute growth that we have and the fact that we turn that into cash gives us the opportunity to create value for our shareholders. That's what a differentiated strategy delivers for you, our shareholders and for our investors.

And maybe changing direction a bit and just talking a little bit about how and where do we actually generate that profitability. Albert called out already. We're the largest building materials company in North America with -- today represents about 75% of the group's EBITDA. And no one really comes close to the size or scale of the business in North America. On the left-hand side, you can see our market positions and those are significant, whether it's our Essential Materials business or the downstream Building Materials businesses. But I think I always can talk about, those businesses are great but it's really that 50-mile radius around our plants. It's then that network that we create to actually be able to deal with our customers' challenges. And what's encouraging certainly is on the far right-hand side, kind of the longevity, what secures that business position, allows us to continue to build out this strategy. It's the fact that we're the largest owner of mineral reserves in North America. That gives us the confidence to continue to invest in and across key markets. And over the years, if you look to the U.S., in particular, we've really done a nice job of building an attractive mix of both regional sector and end-use exposures that deliver that higher growth that Albert talked about and more sustained returns. And on the map itself, if you look at the Northeast, which represents about 30% of our top line sales, high population density, extensive infrastructure network, a very heavy RMI market, just due to the climatic conditions, always repairing roads, houses, things of those sorts. And so that is a standout and really the bedrock of our business. And it differentiates ourselves as you move to the South and the West, which represents about 70% of our sales in North America and states like Florida and Texas, in particular, high growth rates in terms of population migration that really drives that new build construction. And so it's that balance that is really important to us and the continuation of building out the model. But I think importantly, we're the #1 player in the top 10 fastest growth states within the U.S.

And turning now to Europe, which represents about 25% of our EBITDA. We're the #1 building materials company in Europe. When I think of Europe, kind of think of it in 2 parts. We've got Central and Eastern Europe first and it's actually similar to some of the smile states in the U.S., so the South and the West of the U.S., there's a lot of similar construction trends, a lot of new builds going on and also a lot of working on the whole area of infrastructure. This is a region of Europe, which has a deficit from an infrastructure perspective, deficits in roads, deficits in water and in railways and in health. So it's a region which is a very significant net recipient of EU funding, funding that's going to run for decades in terms of trying to address that infrastructural deficit. But in addition, we're beginning to see an emerging demand for our solutions offering in these markets as well. And from a CRH perspective, it's actually home to some of the strongest and some of the best assets we have across the group. In fact, some of the best and highest quality assets of anywhere across the building materials sector. Secondly, when you move to Western Europe. A lot of Western Europe is already built out from a new build perspective but it's a very strong RMI market, repair and maintenance, a very resilient annual growth from an O&I perspective. Now the EU itself is a very regulated body and that drives a lot of regulation around the whole aspect of sustainability and construction and construction techniques. But that regulation drives innovation. And indeed, Western Europe is the innovation hub globally for building materials, both processes and more particularly products as well. And we take a lot of what we innovate in terms of Western Europe and we're able to scale it over across into the U.S. So overall, Europe benefits from an underpin of EU funding for infrastructure with approximately EUR 2 trillion of funds in place across our European footprint.

So when you look about those 2 geographies, what is it that you get by having those 2 and there's a tremendous amount of value that's transferred between our 2 businesses. As Jim called out, Europe is really the most regulated construction market in the world. Really focused on sustainable construction techniques and that transfer of that knowledge to us in the U.S. in terms of North Carolina -- or North America, is critically important because it allows us to be at the cutting edge of the evolution of that sustainable construction. And when you think about the U.S. and the transfer of knowledge from U.S. to Europe, we have a very strong outdoor living business and critical infrastructure business. The knowledge and the skill about how we grew that business here plays very well in growth markets in terms of Europe. They're dealing with the same problem, so managing water, telecoms and energy. So it's that exchange of knowledge that really creates a high level of value. And then you could expect we would do these things that you would hope we would do, right? We leverage the scale of the business from a procurement standpoint. But I think most importantly is that synergy delivery. So we focus heavily on M&A and the growth of our business but the opportunity to share those best practices, those learnings in markets and deliver a higher level of synergies at a faster rate is critical to our growth story. And so when you look overall, that model really drives and Albert called it out, higher growth, higher profitability, strong cash conversion and then better returns for our shareholders. And a great example of that is a deal that many of you would be familiar with when we acquired Ash GroveCement back in 2018, our largest acquisition we've done over the past 5 years. It's an integrated business, covering large quantities of large geographies across North America, cement, aggregate and ready-mix and what happened? Well, we had a very substantial cement business in Europe, the transfer of the engineering and technical skills to our team in Ash Grove, embedding people and processes there allowed us to drive a high level of performance. And how do you engage in downstream and vertically integrated businesses? We learned a lot from our European colleagues to be able to drive, as you see here, a doubling of the profitability over 5 years and an increase of over 500 basis points in the underlying margins of that business. But I think a significant call out here is the platform that creates. So essential materials are critical. Ags and cement critical to allow us then from an M&A standpoint to look at those downstream businesses that are in alignment with our strategy with the key drivers of economic growth.

Okay. For this next part, I'd like to talk about some of our recent financial performance. As you can see on this slide, on any key financial metric, we've delivered a consistent, profitable growth over the last decade. We've increased our EBITDA threefold over that period, which is equivalent to an annual 10% CAGR growth. Our EPS by over 14% per annum over that period, which really shows that leverage we have between the EBITDA line and the EPS line in CRH. We've delivered a 900-basis point margin improvement over that period and we significantly increased the level of cash we are generating, reflecting our relentless focus across the group on cash conversion. And returns, a key performance metric for all businesses, they've increased by 750 basis points over that period, a good performance to date but there's still plenty of room for further increases in our returns. So overall, as we can see, strong growth across all the business consistently year-on-year but crucially, we're becoming more efficient as we can see from the improvement in margins, cash and returns that we are generating through the cycle. We've also set out here on this slide our consistent out performance against some of the best operators in our industry, both at an international level and indeed in terms of our U.S. peers. And this model captures the performance over the last 5 years, this slide. And you can see, we've increased our EBITDA by over 60%. Again, 550 basis points improvement in margins, almost 80% increase in operating cash and improvement on our returns by 260 basis points. But for me, what's really interesting is that when -- instead of looking at the totality of the 5 years, if you go back in and look at each of the individual years from the last slide, each year, you see that consistent year-on-year growth for CRH. If you go in and look at the peer performance, you don't get that in terms of consistency and in terms of volatility. And simply, we could not have delivered that consistent performance year-on-year without our closely connected portfolio and our integrated business model that we have. That's what drives that consistency through the cycle for us and that's what differentiates us. We could have looked at many other metrics but the message is clear, our business is delivering consistent superior performance for our shareholders. So let me take you through some of the key drivers, which has driven that strong and very consistent performance. Firstly, as Albert and Randy said, we operate in very attractive high-growth markets in terms of North America and Europe. And then within those regions, in terms of Southern and Western states and indeed, Central and Eastern Europe. So good high-growth markets in terms of new construction, driven by population growth and migration trends. Our integrated solutions model is a real differentiator for us. We've transitioned from being a sole supplier of base materials to offering bespoke solutions solving the complex needs of our customers and delivering value and growth to our shareholders at the same time. Our inorganic growth potential, which is directly linked to our connected portfolio, and for me is a key differentiator and what that does, is by playing along that value chain gives us so much more optionality in terms of inorganic growth, which again has come true in terms of performance in the last 5 and 10 years. We've had 9 years of consistent margin improvement and that's really through the continuous relentless focus on business improvement and also the strategic reshaping of our portfolio over that period of time. Our business has generated $20 billion of cash over the past 5 years, which represents an 80% cash conversion from EBITDA. And we've had a proven track record in terms of M&A. But as Albert said, we will always retain our financial control and discipline. In fact, since 2014, we've divested of $12 billion of assets at 11x EBITDA. Half the assets that were in CRH in 2014 have been disposed of. And at the same time, we've reinvested those proceeds and invested a total of $22 billion since 2014 at an entry levels of 8x EBITDA. So today, fundamentally, in CRH, we have a structurally better business. A business which is simpler, leaner, less cyclical and less capital intensive and that has been driving that higher growth in terms of cash and returns for our shareholders. Now in terms of capital allocation, which is a real key strategic strength of CRH. Every dollar of capital deployment that we allocate is analyzed and assessed through the lens of maximizing our shareholder value. And over the last 5 years, we've allocated $20 billion of capital. 60% or $12 billion of that has been allocated to accretive M&A and expansionary CapEx, investments that are going to drive further growth and valuation for many years for our shareholders. We've returned about $8 billion to our shareholders in the form of our progressive dividend policy and our share buyback program. And this $8 billion is before the significant increase that we announced earlier this year of $3 billion. And indeed, this morning, we've announced the latest tranche, an additional $1 billion and which is part of that $3 billion and that's going to run up to the end of December. So taking all that together, our disciplined M&A, our expansionary CapEx investment and our increased cash returns to our shareholder really demonstrates our efficient and disciplined approach to capital allocation all the time with the objective of maximizing the value for our shareholders.

So that's the story so far. So let's talk about how we see the future and how do we think we are positioned to accelerate that growth in the years ahead. Well, I think we have 3 strong pillars of growth across CRH. First behind me in the top left-hand side, we have organic growth. Our 2 major markets, the United States and Europe. We serve the construction market across 3 end-use markets, infrastructure. Jim has already referred to in Europe there is significant support, $2 trillion for infrastructure spend across Europe. The most [indiscernible] system, we've seen the IIJA, CHIPS Science, Inflation Reduction Act, the most -- the largest, most progressive investment in infrastructure since the 1930s has bipartisan support, it's funded and it's hitting the streets now and actually the impact will be felt over the next decade. We're the largest building materials player in all of North America, infrastructure is half of what we do. But it's not just about being here and capitalizing on that opportunity, it's about building out at a better quality. But what's happened over the last couple of years is very interesting. On top of that, the silver lining in the cloud of the deep globalization of our world has meant that you're seeing the reshoring and onshoring of manufacturing facilities back into Europe and into the United States. So countries are giving significant subsidies, CHIPS and Science, Inflation Reduction, to bring back onshore into the United States critical manufacturing in the areas of chips and in terms of pharmaceutical, bioscience and life science, technology, electric vehicle manufacturing. There is no week that goes by when some mega project is not announced. We see $200 billion of private investment construction has come back and is underway in the United States at the moment. And there's $200 billion in Europe as well, as countries are seeing to secure the supply of these critical areas for the future of our businesses. So there's 2 strong areas of growth that make up between 70% and 75% of the total construction chain driving on ahead. And quite frankly, they will go on ahead for the next decade. Residential is subdued, interest rates are at levels we haven't seen for a decade. And until interest rates come down, it's going to remain subdued. But the fundamentals are strong. I feel sorry for kids now who have to try -- go and try and buy homes and houses. I wouldn't like to be doing it myself. The affordability issue means that demand levels are very low but when interest rates come down and they will come back down to a more normalized level, not what we saw in the last 5 years, then you'll see the housing market rebound because every year that we don't build just backs up the demand that's there. And here in the United States, we have an underbuild of 5 million homes already in a market that needs 1.5 million homes per year. So we believe with strong infrastructure and nonresidential as a result of the onshoring and indeed a residential market that will recover through to the fundamentals, our organic growth credentials and our prospects are very good, both in Europe and in the United States. But the second pillar is very important, inorganic growth. In the history of CRH, 2/3 of our profit growth has come directly or indirectly through acquisitions. And I pick my words very carefully there, directly or indirectly through acquisitions. Any idiot can go and buy growth but look what Randy showed you about Ash Grove. We didn't buy growth, we bought a business and doubled the profitability. That's a better business. So how do we do that? Well, we do that because we're a large public company of scale and competence and experience and understanding and we buy businesses, we take them in and we integrate them and we create value with those businesses that they could not do themselves, synergies, procurement, people, technology, additional sales. We don't do blowout deals, we do somewhere between 30 and 60 deals every year. The average size deal in CRH is between $50 million and $150 million. We don't choose to do those deals at that price, that's our market. It's a fragmented industry which means there's lots of opportunity but also it's good because it reduces the risk if you get 1 wrong. And don't get -- we don't get many wrong. We do get some wrong but we get a lot more right than wrong. And the delivery means that we show very good returns and very good cash. And 2/3 of the profit growth comes through that profit we buy and profit we create when we integrate those businesses into CRH. Jim showed a slide there where we had over the last 5 years, generated $20 billion of cash -- free cash flow over the last 5 years. The next 5 years is going to be $35 billion, $35 billion of free cash flow. And the question that you should be asking all of us is, what are you going to do with [indiscernible]? We're going to do exactly what it is that we did in the last 5 years. We're going to reward our shareholders. We're going to give about $10 billion of it back to you in dividends and share buybacks but we're going to spend about $20 billion to $25 billion growing our business footprint, investing in our business through CapEx, investing through M&A. That's what we're going to do and grow that footprint, grow the quality of our business as we have done over the last decade. So organic growth and inorganic growth. You know what we do. You can make your assessment of whether you feel these are good markets. You can make an assessment of whether we're really incredible when it comes to doing M&A and executing an M&A. It's a core competence as far as I'm concerned. But the next thing what interests me, is how agile and innovative we are as a company. Jim referred to the fact that we have sold 50% of the business we owned a decade ago. Find me one other business that's done that and has had the financial performance that we've had because we pivoted. We saw the future and we reacted. And that's what investors should want, people on their toes, people looking to manage the business as if it's their business. And look at the financial performance over the last 10 years. We innovated with new products. We took on new businesses. We've found new ways to serve the market. We've only just started. The appetite has been vetted, that innovation is what drives our margins, our profitability, our portfolio, our thinking, our strategy. All of that is what drives the performance of CRH. And in doing that, we have built a new CRH. A new CRH that has multiplied the profits by 300% over the last 10 years and we sold half our businesses. But guess what, we bought $20 billion of new businesses for the new CRH and that's why the allocation of capital is key going forward to decide what direction do we take CRH, where do we go? And we're telling you the answer is in the numbers. It's in the differentiated set of strategy in and around solutions that drives the cash.

And when you think about the breakdown of where that growth is going to happen organically, inorganically, maybe a breakdown within the U.S. of our market, the end use. 40% of the sales in the U.S. are in and around infrastructure spend and you're well familiar with the IIJA Act. Albert talked about it, kind of the most transformational deal in that space since the early 1900s. It's underpinned 5 years plus of growth. I know it's a 5-year bill but I think it's going to take a little longer for dollars to continue to make its way through the system. And that's complemented by the work that states have done individually. So the funding environment is strong. It's that 50% uptick in roads and highways that gets a lot of attention. But for us, as importantly, it's the $200 billion plus that is within the water, telecoms and energy space because that's very complementary in terms of the products and the solutions that we offer to our customers. And as we've discussed already, we begin the process at the very early phases of engineering and design that allows us to incorporate these projects or products into this space. And it really puts us in a position to be probably the most uniquely positioned to benefit from the long-term investment that's taken place in U.S. infrastructure. Albert called out the U.S. nonres, 30% of our sales, significant amount of onshoring that's taking place and certainly gives you visibility through 2030. And we call out on the map on the right-hand side, you've seen those names before. Some of the world's largest corporations are investing in bringing critical manufacturing back to the U.S. And that's at rates we haven't seen for years, it's 2.5x the spend in that space. And we're participating in projects like that. But what actually gets me as excited is what has to happen as a result of those projects. It's not just the project alone. It's the underlying infrastructure that will have to be developed and created to support that. So it's the health care facilities, it's the schools, it's the roads, it's the housing to support the employees in these geographic areas. That gives you a window in terms of the next 10 or 15 years of growth. And interesting about these projects. They are -- I'd call them pretty advanced in terms of the technology and the technical requirements that those jobs have. So we're partnering in a number of these projects already early phase of development because we have that unique capability to bring that engineering design and also understand performance and then we can replicate that for them in other parts of the country. And what ends up happening, probably from an innovation, Albert called it out, the innovation standpoint is really the combination of those materials, products and services that kind of wins the day and puts us in a great position as the U.S. continues to reindustrialize this portion of the economy. And Albert called out the res market, 30% of our sales. A significant portion of that is in and around the RMI space. And Albert said and certainly, we experience and see it across all of our markets. The pace of new build construction has been impacted by rising interest rates and more affordability constraints. But the long-term fundamentals are strong. So when you think about the underbuild, when you think about the shortage of currently available homes, just think about the aging housing stock and what that means from an RMI standpoint and the demographics certainly are favorable to give us confidence of what that mid- to long-term outlook is and gives us confidence to be able to invest and continue to grow that segment of our business.

So clearly, the U.S. is in a good space. But then again, so Europe. And I can't overstate how important Europe is to the story of CRH. Yes, it's a region that's got good growth coming forward, particularly in Central and Eastern Europe. It's exactly like the smile states here in the United States, strong economic growth, good infrastructure investments, upgrading residential, building the economy in nonresidential. That's a story that's going to play out over the next 20 years. But Western Europe is very interesting. Good RMI market, a lot of repair and innovation. But just look at Europe in its totality. The population of Europe actually is greater than the population of the United States and yet the footprint fits right east of the Appalachian Mountains, it's that small. And that causes problems for construction. A lot of the cities are already built and aging. It's difficult to move around. And when you construct and reconstruct , you've got to do so in a very careful and a very regulated and careful manner. The European Union leads the world in terms of how it treats sustainability. Europe is the most regulated and technically most challenging part of the world to construct in. It imposes standards that we don't see anywhere else in the world. So we have to pivot and innovate and think but what we do is, we create. The products, ideas and the concept we create in Europe and innovate there, we can bring those to scale here in the United States because actually, they allow us to build better, quicker, cleaner and cheaper and faster and that's what America wants. Randy referred already to Ash Grove in terms of how we increased the profitability of that business. Yes, it was about our engineering capability. Yes, it was about bringing our process engineers over here and they're still here working away. But yes, it was also about bringing new products that didn't exist here in the United States but they did in Europe. Products that allow you to pour concrete at minus 30 degrees during the winter season. Products that allow you to deal with excessive wet periods, products that dry quicker. So now whilst there used to be 1 type of cement in the United States up to 5 years ago, there are now 3. By the way, in Europe, we have 8. So the innovation that we're seeing in Europe is hugely important in bringing opportunities to the United States in terms of scale. And as we replicate that opportunity, that gives us more profit opportunities for growth. Here, I want to talk to you one more time about acquisitions. The story of CRH has been acquisitions and our strategy in that and how we execute that. I spent my life working in CRH. This is a core competency of what we do. Jim referred to the finance and discipline that we have. We probably -- every deal we look at, I'd say, of the 10, 1 gets through to round 3. And of that, I'd say about another half of them actually get through to be executed. That's how tough we are on ourselves. Our industry is very fragmented, as I said. We have a long pipeline of deals across a lot of geographies. The advantage of that is it allows us to pick and choose, not based on financial returns but based on the position and the type of business we want to build, we get to choose, we get to influence that. The shape of CRH is carefully thought out for the future, not for today. In the United States here, the top 10 players only make up about 25% of the market and the market is growing, market grows with new business. So the fragmentation is a feature and nature of the business here in the United States as it is in Europe. The average size deal as I said we have, is between $50 million and $150 million. That's a lot of money but if you get 1 or 2 wrong, it's not going to break the bank and we learn our lessons, if we get them wrong but we get an awful lot more right than we get wrong. And remember, 2/3 of the growth of CRH comes directly or indirectly through the acquisition process. Every time you meet one of us, you should ask, what are you doing with my money? How are you spending it? Show me the returns? We showed you the returns. Show me the cash. What's the plan? What's the strategy? Because you're buying a business for future growth and 2/3 of that growth comes through the acquisition process. And finally, the cash we generate for our business feeds the machine. We're telling you now here today in the next 5 years, we are going to create -- we're going to generate $35 billion of free cash flow. And the question is, how will we apply that to grow our business. So we're thinking of how we apply that to our business but we're doing so against a background of a changing world and a changing environment. Climate change surrounds us, it's accelerating on a day-by-day basis and we need to embrace this as part of our strategy. It's not our only strategy but it's part of our strategy. There are more people coming onto this planet. We're building more and more in urban areas. We have to repair aging infrastructure and all of that has to be done quicker with less people, cheaper, faster and cleaner. There's incredible complexity coming to our world and it's people like ourselves who have the capability of material science, design skills, engineering and manufacturing capability who are going to help solve that. I've said it before and I'll say it again, you want people like CRH in the middle of this fight, you want us there. Because we will do the right things and for our shareholders, we'll make money doing it. Quite simply, we just cannot continue to run our business, run our industry the way we have in the past. We must improve the build environment and it will become more resilient and it will become more sustainable. But we'll only do so if we adapt and innovate and that's exactly what we're doing within CRH.

Just building on that, sustainability is really at the heart of what CRH does in the markets that we serve and it's deeply embedded really in all aspects of our business. And when you start on the left-hand side, specifically on circularity, it really makes logical sense, right? The more recycled materials that we can use, the more we preserve our own scarce natural resources and prolong the life of the reserves that we talked about earlier. And in 2022, we made really good progress in terms of recycling materials in totality. Just over 42 million tons of recycled materials in the context of our business. We're the largest recycler in the U.S. of any material. And when you look at our asphalt business, certainly a global leader in terms of the asphalt recycling, 25% of every road accounts for recycled content. And our ambition is by 2030, for that to be 50%. And to talk about fossil fuels and lessening the dependency on fossil fuels, we continue to set the pace. And in 2022, alternative fuels accounted for 36% of the fuels we consumed in our cement operations globally. And as you move to the center, on decarbonization, we've been pretty clear in terms of our target. So by 2030, a 30% reduction of Scope 1, 2 and 3 emissions. We think it's the most authentic target there is. It's not a kg per ton, it's holistic to our business. Those targets have been validated by the SBTi, in alignment with the 1.5 degree celsius framework. And what's really impressive is the ground-up work that has been done. So in each operation, the men and women who are running our businesses understand kind of steps they need to take and the role they play in that decarbonization effort. And then on innovation, that's certainly at the heart of who we are and what we do. Albert talked a lot about the changes that are taking place within the built environment, to be more sustainable, reduce construction times, improve efficiencies, prolonged life cycles of the structures that we participate in, solutions that are ultimately better for our environment. And it's really our integrated approach that allows us to do that. But I think we're humble enough to realize we're not going to solve it by ourselves. And so we created a venture fund of $250 million to be able to reach out to other stakeholders who have better technology or products or services that would complement the offering, allowing us to continue to move the needle. We're off to a good start, we have ways to go for sure. A lot of progress has been made but I think we have a good foundation to ensure that by 2030, we're 30% reduced but more importantly, by 2050 we're net zero.

So now I'd like to take a minute and maybe start to pull this together and really to talk about what you should expect from CRH into the future in terms of value creation. Firstly, just looking at the organic growth drivers. Overall, the demand outlook across North America and Europe is very positive. And that's going to -- which is going to support future organic growth across all our businesses. In infrastructure, our single largest end-use market, the outlook is robust. Demand is underpinned by significant U.S. federal and state funding and EU funding programs across all our markets. In terms of residential, we talked earlier, it's subdued in the new build environment in the near term. But longer term, the fundamentals of this market are still very supportive. And really, in terms of long-term growth, it's quite an attractive market for us in terms of new build residential. But short term, it's subdued. In nonresidential, momentum is building due to a lot of the onshoring and reshoring activity, which is again underpinned by significant public funding, again, in the United States and indeed in Europe. And with regard to pricing, we expect positive continued momentum in terms of pricing and that's going to be supported by good commercial management and our value-based strategy. And against that organic backdrop that I've just set out to you, here you can see what you should expect from us going forward. So assuming sales growth of mid- to high single digits, this is above the market growth and that's supported. Why is that above the market growth? Because it's supported by our leading positions that we have in those key markets and our differentiated solutions model, which we talked about earlier. With an operating leverage of around 25% and further value-accretive bolt-on M&A and continued share buyback program, that translates into double-digit growth in terms of our earnings per share on an annual basis. So overall looking at that. First, in terms of our growth profile. Secondly, in terms of the level of cash that we're going to generate. And thirdly, in terms of our balance sheet strength. We exited last year with the strongest ever balance sheet we had in CRH. We believe we're going to generate financial capacity in the order of $35 billion over the next 5 years. That provides us with significant optionality for long-term value creation for our shareholders. But I can assure you that we will not lose our financial control and discipline. And will indeed invest it for future growth in terms of M&A, accretive M&A or in terms of expansionary CapEx or will return it to our shareholders.

So we updated the market about a month ago as what to expect for 2023. And the slide here just repeats that. Profits will be up about 10%, about $6.2 billion EBITDA. By the way, we'll turn about $5 billion of that into cash more. EBITDA margin will increase again for the 10th consecutive year and it will continue. Our net debt-to-EBITDA is at historic lows, just over 1x. We have the capacity to do deals in CRH and spend that money or return it to shareholders. It was another record year for CRH but that's becoming a tired and [indiscernible] phrase because every year is another record year for CRH. So one last slide to leave you with. If you look across the slide, looking from left to right, we have the premier positions in the United States and Europe, the 2 most profitable construction markets in the world. Unmatched size and scale, that matters, that matters because we translate that size and scale into greater profits, better margins, more cash. Crucially, if we are to be in the top fastest-growing states, top 10 fastest-growing states in the United States, we are #1. I wouldn't want to be anywhere else. And on top of that, we have a business model that's evolving and innovating and creating higher profits and higher margins and more cash year after year after year. The agility and innovative concepts we talked about are embedded deep within our DNA now. We're faced here with the golden era of construction in the United States. It's a catch-up but we're fortunate enough to be sitting here at a decade of growth across not only infrastructure but also nonresidential. And that nonresidential is going to be crucial for the U.S. economy because where is it going, as Randy showed you in the map, it's rebuilding the heartland of America. It's not the [indiscernible], you're building back America's industrial base, jobs, wealth, economy. And just think what's going to happen around those big businesses. New towns and cities will be built, new businesses will be established, new infrastructure will be built. It's a great story for America. And you know that ours -- the powerful message we have on M&A. As Jim has stressed, the financial discipline that's at the core of CRH will never be challenged but nor will be our ambition to go out and search for businesses, inorganic growth because we know that drives our profitable growth. All of that's wonderful. But tomorrow morning, we all go back to making big rocks into small rocks and creating solutions because it's about being a good operator. It's still the small stuff that no one notices on a Tuesday afternoon at 4:00 p.m. that no one else sees bar you, that earn you that nickel, that dime, that penny. That's what our business is, about industry-leading operations capability. And as I look at that, I'll talk about the management team we have here. We're fortunate enough the 3 of us represent a management team of about 250 highly skilled, professional dedicated people. It doesn't matter who's on this stage, you could rotate take through here for 10 days. They all sound and look like us. Don't underestimate the gray hair, don't underestimate the ambition. I trust people who spend my money wisely and you should too. We're the largest recycler of any product in the United States. That's really important when I think about the importance of circularity and sustainability as part of our strategy. Our strategy is about a changing world and adapting the products we make further changes in that world. We're not stuck with a business strategy of 20 years ago, like so many of our competitors. Our strategy is 20 years ahead. That's where the future, that's where the growth is, that's what the golden eggs are. And we do all of this from a position of financial strength. We spent the $20 billion of the last 5 years wisely. We built our business. We tripled our profitability. We returned $8 billion to shareholders. The next 5 years is going to be $35 billion. So what are we going to do with this? We're going to grow our business because we're going to invest in the business. We're going to reward our shareholders for their support and we're going to hand them back about $10 billion over the next 5 years in dividends and share buybacks because they deserve it because they support us. Our allocation of capital is peerless, is the thing I am most proud of in CRH. And at the end of the day, listening to Jim and myself and Randy, you just know, we will never ever lose that financial discipline that you'd expect to be at the core of CRH because we are here for our investors and our shareholders. It's an exciting journey ahead of us. The next -- last 10 years, 10 years have been fantastic but the best years are ahead of us. I hope you come along and enjoy the ride. Okay. Listen, we've just finished this part of the presentation now. We've run a bit over time. And so what I want to do now is, I want to move to the Q&A part of the session. It may be a little bit shorter, maybe a maximum of 15 minutes and I know there are questions on the line as well. We have some microphones in the room. So if I could ask you, please, if you could raise your hand if you want to ask you a question. And please, if you could just give your name and the name of your institution that you represent not just for me but also for those, there's a lot of people watching down the line just so that they can hear the question and know who you are. So we'll try and move for this and we'll try and be as succinct as we can be in answering your questions to get through as many of the questions as we possibly can. Sorry. Yes, this gentleman just here.

Anthony Pettinari from Citi. Albert, you talked about the growth outlook but I'm wondering how the integrated model might perform in a downturn. Can you just talk about sort of the historical performance of the businesses, maybe in recessions and slower growth periods, fixed versus variable costs and how you've operated in those kinds of environments?

Yes. Anthony. Unfortunately, I worked in this business during the global financial crisis and that was my third or fourth recession. So unfortunately, we've been through all of this. In the last 10 years, we've done a lot to adapt our businesses. We've thought about it in 2 or 3 different ways. We learnt lessons. First of all, construction that comes from the public purse and is publicly funded tends to be more resilient to recession. It's not recession proof but it tends to be more -- it tends to be stickier. And in fact, in times of recession, publicly funded construction can and be supported -- you can remember in terms of what happened during the last recession here in the United States. So 50% of what we do in the United States alone here, 45% in Europe comes through the public purse. So we've designed that in that particular way. Another part of our business that is much more resilient is repair and maintenance. Because at the end of the day, you can choose not to build something new but largely speaking, if something needs to be repaired, it is repaired. And that, again, has shown to be much more resilient across our businesses. So some of our business, in particular, our Outdoor Living Solutions business is the repair and maintenance business, a renovation business, I should say, so that tends to be more significant. So you can't beat the cycle but you can smooth the cycle. And lastly and crucially, the design of our business through the value chain, where we've got -- of course, we've got high fixed cost business but a lot of our business are downstream, have a much more variable cost base and it's much easier to get out of our cost base as the volumes disappear or slow down. So from our perspective, we have a much more flexible cost base that we can get at and we think that the markets we serve are much more resilient to any potential downturn and that's how we deal. We can't beat the cycle but we can be the best in the cycle as we've shown in recent times. Ross?

Ross Harvey from Davy. Thanks for the presentation. Albert, you mentioned the additional revenue pull that you got from the integrated approach, 4x higher profitability. Can you just elaborate on how you drive that revenue pool, the additional profits and the value add?

Ross, so you're referring back to the slide -- I talked about the road solutions there, whatever it might be [indiscernible]. Well, actually, maybe it's probably best, I'll ask Randy to comment in a second because he is the one who actually runs -- ran that road business, Nathan runs it now. But in terms of what it looks like, I mean, the thesis behind it is that not only do we want to control the downstream because actually the quality of what we do is but we pick up extra margin. We sell stone 3x in effect but maybe, Randy, in terms of how we deal with the customers, what the customers think of that and how we get paid more for that, might be interesting to talk about that.

Well, I think -- again, it's the evolution of the business and certainly probably 10 years ago, we sold -- and we still do, by the way, we sell tons of aggregate and tons of asphalt but we spend a lot more time early on from the design and engineer and drive specifications. And what has happened over the years is those partners, specifically DoTs, as resources have become constrained, as expectations have become higher in terms of the output or the performance of that road, their confidence level has changed in our ability to not only design it right, produce it right, install it right but then ultimately maintain it, that's given us a really unique competitive advantage. I think the other bit of it too, though, is on roads in particular and you'll get a sense of it as you work your way around here this morning, is that every road has storm water management, some sort of telecoms associated with it. So the integration of those products has been really important. And they all are derived from cement or aggregate right? So you're mining, you're producing a ton of cement, you're adding value down the stream. We just believe that being closer to the customer allows you to drive a higher level of value and puts you in a position that others in the space don't enjoy.

Okay. Thanks, Randy. I'm going to try and move through things very quickly [indiscernible].

Keith Hughes from Truist. Question on your European materials, you talked about some of the opportunities there. Is there anything that is coming that's going to substantially raise the margins of that business, either things you would do or things going on in the market itself, get it back up closer to where the North America is.

I think the issue with our European materials business or the Essential Materials business in Europe is, it's probably about 4 or 5 years behind where the U.S. is in terms of both pricing and in terms of volume levels. I think volume levels will remain relatively known to us, maybe 1% to 2% growth in Europe. The issue with Europe is the fact that pricing was very slow coming out of the global financial crisis. I remember very well for 30 years, the price of core products, a ton of cement, aggregates or concrete was identical in the United States as it was in Europe. And what happened was, after the last global financial crisis in the United States, it recovered quicker and pricing has been moved on and been quite progressive since about 2013 to where we are today. Europe only got on that maybe about 5 or 6 years ago. So I think the significant price increases that will come that will bring it back. There's no logical reason to have differential pricing because the same cost structure applies. And in fact, actually, I could suggest that actually could be slightly higher in Europe, given the structure of the market there. So I do believe we will see strong progressive price increasing in our materials businesses across Europe in the next 5 years that will bring it back and recover back to the level we're seeing here in the United States. Gregor?

Gregor Kuglitsch from UBS. So I think a new piece of information today you gave us, was that you were looking at a $20 billion M&A pipeline, which I think has doubled the last 5 years. I guess I want to understand what's that subject to and if the value opportunity isn't there, kind of how flexible are you in that? And I guess then sort of tied into that, maybe for Jim on the financial side, if you just work it out, I guess, if you just apply even 10x, you'd have 6%, 7% annual EBITDA contribution just from deploying that money. And I guess the question therefore is, should we more -- I appreciate the double digit is limitless but should we be thinking about mid-teens type EBITDA growth if you add up, if you assume that we deployed -- that you deploy that kind of capital? In other words, [ 7% ] organic, [ 7% ] acquired, if you follow me.

As usual Gregor, 5 questions there. I'll do the best to get through them as quickly as I can. Just on the $20 billion, well, let's just look at the math, let's look at the numbers. Last year, we spent $3.6 billion in acquisitions, so that's 1 year. Then also that $20 billion referred to is internal CapEx and M&A. I will always do internal CapEx over M&A because it's our best returning, our safest business and as I look at growth in the marketplace we're seeing now both in Europe and the United States, we need to increase capacity to grow in that marketplace. So actually, that's what we -- there's a natural pull through with regard to that. But one thing for sure is, if there's no M&A and with no CapEx, we give them back. But I'm confident, given the state of the markets, there's going to be sufficient M&A and sufficient CapEx. Jim?

Yes. I think, Gregor, when we looked over the last 10 years, right, we -- the first -- one of the charts I showed earlier was the 10% growth in terms of EBITDA. That dropped through to 14% in terms of the leverage, right, that we get at that level. We set out the macro drivers. I think that's what you should expect from us going forward. And that's what we set out in terms of the structure, how you build that up. But just to build on Albert's point, I think, when you take a lot of the -- we talked through the end use markets in terms of where we see infra and nonres today in terms of momentum and going forward in terms of residential. And that's what really seen, I think, what you will see in the next 5 years is a bit of a step-up in the expansionary CapEx, which to Albert's point, is great news because they're existing markets that we play in today. And what we can see in terms of the demand that's coming at us, to be able to take the maximum opportunity and get the best returns for shareholders on that. I think you are going to see a step up from that perspective. But again, they're the highest returning, lowest risk in terms of capital allocation we do and see our hedge.

Okay. I'm going to try and be [indiscernible]. Sorry, please, yes on the front left here. I just need to watch our time. We've got to shut this down sharp on quarter to the hour, unfortunately, we'll lose the line, so.

Yes. Kathryn Thompson, Thompson Research Group. [indiscernible] question that has a near term and a broader term look to it in some of the nonres end market. Investors today, at least U.S. investors are focused and concerned about a weakening in the nonres end market. However, for CRH and given your specialty in terms of large complex projects, how would you respond to those concerns, especially when you've talked about design build with your infrastructure side but how does this play into nonres and how does that better insulate you from what we're seeing in the market right now?

I think what you're seeing within the nonres market, you see some markets being weaker but other markets being much stronger. And as Randy referred to, with the map that he showed there, the type of projects that we're looking at, there are $200 billion of mega projects. The names on that list are some of the most impressive corporations in the world. But if I just take some of the highlight projects, the Intel project that's going on in Ohio, that's a 10-year build-out, Samsung in Austin, Texas, it's an 8-year build-out. We're major suppliers to these businesses. So they are building through the years for the future. They're building it for 10 years, to run it for 20 years. So this is happening within the nonres space but it's highly specified and very, very challenging from a manufacturing perspective. That plays to our strength because we're in discussions with them to design and shape what they're doing. It's very interesting. I don't know how many of you have ever been to a data center. If you go to a data center, data center is about the size of about 4 football fields but the room where they keep the data is about the size of a tennis court. Everything is to protect that room and by the way, the life cycle of a data center used to be 4 years, is now probably 2 years. It's the most technically advanced buildings you'll ever come across in terms of heat control, temperature control, security, protection and guess what? Every year, the amount of data they have to store grows by about 40%. So within 2 years they're out-of-date. So when they build data centers, they build one here and the minute it's finished, they build another one here for 2 years out. And all the time they come into us, how can we have the most exact specifications. These are just not blocks that you build warehouses and that plays to our strengths, that high end, so whether it's pharmaceutical, life science, biosciences, data centers, chip manufacturers, semiconductors, all of this is leading to a really high-quality business [indiscernible]. So within that space, we're insulated. In fact, it's a real sweet spot or a hotspot that's going to continue on for years. Okay. I've got time for one more question. I'm -- over to you, sorry, sir.

Adam Seiden from Barclays. You spoke a lot about M&A, of course. Just thinking about, when you think about the different growth drivers for that M&A, how that varies across product lines? And then specifically, you made a comment in the beginning of the presentation, around North America mix getting larger or growing over time. So just thinking if there's any slant to one area or the other? And then also from a regional side, if you like where you're positioned?

Yes. Well, look, we're thoughtful people. So it's not rocket science. We work out where the United States is expanding and that's where we try and plot our business going forward. We think -- we're very thoughtful about how we shape our business well. So the regional one you can work out because we can all work out exactly where the United States is going to expand and we try and build our facilities or buy our locations or build our locations within those markets because that's where the growth is going to be. But we also talked about the shape of CRH we want to be. We're not just chasing growth. We're chasing quality growth. What I mean by that is that we want to balance between new build and RMI. We want to balance between our Essential Materials businesses and our outdoor living space business and our infrastructure business watching all the time how we can do -- and we're looking to branch out and watch what new technologies are taking place to use within the construction area and parts of the states, for instance, as you talked about the U.S., who have got the funding to fund this, some states do, some states don't. So the top 10 states that we said, the fastest-growing states, that's a really important stat. They're well-funded, well-financed states that will give superior growth to other parts of the United States. So we do think about it, not only regionally but also by the shape of business because we want to drive the performance improvement of this business going forward. Okay. I'm sorry, I'm going to have to just cut the Q&A there. I thank you all for your attention. We've come to the end of this part of the presentation. I'm going to invite my colleague, Cindy is going to come back and take us through the next part of today's proceedings, Cindy.

Thank you, Albert. We will now transition into the next part of our agenda today and we are delighted to provide an opportunity for you to hear from some of our senior management team in the areas of Essential Materials, Utility Infrastructure, Outdoor Living and Road Solutions. Firstly, for those of you online, this content is now available as a series of video presentations via the Resources section of the event micro site, details of which are in the presentation window and which can be accessed via the Investors page on crh.com. If you have already accessed the micro site, you may need to refresh your browser in order to see this content. That concludes our live broadcast today and we thank you again for joining us.