CemNet has a look across the pond at how three US building materials companies have fared in the 1Q24. While results were stronger than expected in the 1Q24 for several cement producers in America, the task will be to capitalise on that during the rest of this year. Titan America, Summit Materials Inc and CRH have all steered their strategies to maximising US revenues and the benefits are starting to show.

Titan gears up for IPO

Titan Cement International announced this week that it will more closely align itself with the US market as it prepares for an IPO of its US business, Titan America. The listing is expected to take place in early 2025, but the group is already seeing strong sales in this region.

In the 1Q24 Titan reported positive pricing trends in the US and healthy volume levels. However, the group's performance in the USA was also impacted by the heavy rainfalls and adverse weather. Planned annual maintenance shutdowns in the company's two cement plants were carried out early in the year and higher costs lowered EBITDA growth.

With full order books as well as a backlog of private and public works investments, demand for cement remains high in Titan America's operating region. This has been attributed by Titan to the Infrastructure Bill, along with the CHIPS Act, which are transforming the sector's orders. While residential markets remain subdued, expectations are that the Federal Reserve will ease its monetary policy later in 2024.

Decarbonisation initiatives are moving quickly as funds become available. The group has signed an agreement for a quarry to increase its aggregates and calcined clay reserves, while the Roanoke plant will receive US$61.7m in funding from the Department of Energy to support the first-of-a-kind calcined clay production line. Upgrades to the Tampa and Norfolk terminals will increase the group's footprint in the southeast and mid-Atlantic with sufficient materials to meet demand, says Titan America.

Summit Materials starts acquisition integration

Summit Materials Inc projected an adjusted EBITDA of approximately US$970m-1010m for the full year 2024. Moreover, the company aims to raise capital expenditures to approximately US$430m-470m. Summit's results in the 1Q24 were partially impacted by the acquisition of Argos USA assets. Net revenue was boosted by US$336m, or by 89 per cent in the 1Q24 to US$773.2m, while organic prices increased across all lines of business. Approximately US$378.5m of 1Q24 revenue was recognised from recent acquisitions, which were offset by US$21.7m in net revenue divestitures.

The cement sector business segment saw net revenues increase to US$231.8m in the 1Q24. Cement adjusted gross profit margin rose to 30.6 per cent in this period compared to 9.6 per cent in the 1Q23. Sales volumes of cement in the US for Summit Materials grew by 416 per cent on a nominal basis and decreased 2.7 per cent organically due to unfavourable weather conditions. Average organic selling prices increased 5.6 per cent in the 1Q24, according to the company.

CRH pulls its lime business

Another building materials company buoyed by the US market is CRH. It reported 1Q24 revenues of US$6.5bn up two per cent on the 1Q23. Net income translated to US$114m and adjusted EBITDA reached US$445m, up 15 per cent on the 1Q23. CRH found performance driven by positive pricing, early season activity and benign weather in key markets. Performance was helped by the completion of a US$2.1m materials acquisition in Texas, along with seven other bolt-on acquisitions in the 1Q24.

The group also made proceeds from the US$0.7bn divestitures – mainly the disposal of its US lime sector business and also certain cement and materials assets in Quebec, Canada. CRH also made a US$0.7bn agreement on 26 February 2024 to acquire the majority stake in Adbri in Australia. 

North America accounts for 72.6 per cent of CRH's adjusted EBITDA. CRH has seen continued infrastructure growth, accounting for approximately 40 per cent of its revenues, while non-residential accounts for 30 per cent of revenue on the back of increased re-industrialisation activity underpinned by public funding. While US residential new build activity has remained subdued, it is still accounting for 30 per cent of the company's revenues.

Market adaption at work

These three building materials cmopanies have continued to make acquisitions and strengthened their positions in what is becoming a more competitive US market. CRH has been keen to keep its market lead in Texas, Summit has vastly expanded its cement business, and Titan America is raising funds for further growth in 2025.

Decarbonisation and digitalisation are other market trends that are pushing activity for divestments, portfolio adjustments and innovation. Further activity for the acquisition for supplementary cementitious materials can also be expected to rise as the transition away from OPC to blended cements gathers pace.