Amrize AG (AMRZ) Earnings Call Transcript & Summary

Welcome to Amrizes' Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. I will now turn the call over to Baris Oran.

Thank you, and good morning. Welcome to Amrize's Second Quarter 2026 Earnings Conference Call. We released our second quarter financial results yesterday after the market closed. You can find both our earnings release and presentation for today's call in the Investor Relations section of our website at investors.amrize.com. On the call with me today is Jan Jenisch, Chairman and CEO. Before we begin, during the call and in our slide presentation, we reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include a reconciliation of non-GAAP financial measures to U.S. GAAP in our earnings release and slide presentation. As a reminder, today's call is being webcast live and recorded. A transcript and recording of this conference call will be posted to our website. Any statements made about future results and performance, plans, expectations and objectives are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those presented during the call due to various factors, including, but not limited to, those discussed in our 2025 Form 10-K and in other reports filed with the SEC. The company undertakes no obligation to publicly update or revise any forward-looking statements. Please also note that in today's presentation, certain prior period financial information includes revisions that were not material to any previously issued consolidated financial statements. Additional information regarding these revisions can be found in our Form 8-K filed with the SEC yesterday after the U.S. market calls. With that, I'll now turn the call over to Jan.

Thank you, Baris, and thank you all for joining us today. I will begin with our highlights and takeaways of the second quarter. We delivered strong revenue growth of 8.6%, driven by increased mega project demand from data centers and energy to advance manufacturing plants and infrastructure modernization. With the strength of our network and strategic footprint in the most attractive markets, we were able to achieve industry-leading organic growth of 6.7%. We also grew net income by 14.4% and adjusted EBITDA by 5.8% and with this strong customer demand as well as leading aggregates pricing and excellent progress in our SPIRE program. Diluted earnings per share increased 14.7% and adjusted diluted earnings per share grew 8.6%. Oil price-driven cost inflation drove higher freight, diesel and raw material costs, which we are proactively managing with pricing fuel surcharges and Aspire. In our Building Materials business, we had a strong quarter with above-market volume growth, premium cement pricing and leading aggregates pricing growth. Our Building Anelo business achieved above-market sales momentum, driven by a strong pipeline of large-scale commercial projects and growth in residential roofing. Segment pricing improved sequentially and as increases phased in throughout the quarter. We are also successfully executing on our capital allocation strategy of investing for growth through CapEx and M&A, while returning cash to our shareholders. We invested $241 million in CapEx in the quarter as we expand production and improve efficiency to best serve customers. We had excellent contributions from PB materials our recently acquired Aggregates business in West Texas. And in July, we acquired Rapid Ready-mix, bringing significant synergies of our cement and aggregates network in Texas. In the second quarter, we also returned $502 million to shareholders through dividends and our share repurchase program. Our Board has also declared a second quarter dividend of $0.11 per share. Let's now look to our market environment. We have a strong order backlog led by commercial and infrastructure demand and we are actively quoting new projects. In commercial construction, which makes up half of our business, the momentum with mega projects continues to drive demand for building materials. As we said last quarter, we are seeing the strong commercial new starts for building materials convert into new commercial roofing demand. The new AI-driven economy in North America not only meets deal centers, but also energy, water and transport infrastructure. Many of these projects have a significant run time that drive consistent long-term demand for our solutions. The Dodge Construction Index shows there are more than 300 new data centers planned across North America. And our leading footprint and distribution network positions us to serve over 90% of these projects. Letting infrastructure Demand continues to be strong across all levels of government and provides us with a steady multiyear running projects. The Infrastructure Act still has significant funding to be spent, and we are encouraged by its successor bill, which should extend the infrastructure talent. The Build America 250 Act includes strong funding for cement and aggregates intensive projects that are well aligned to our footprint. The overall policy environment supports locally made materials for infrastructure. American Canada are prioritizing domestic materials and merit is positioned exceptionally well for this with our local to local model and made in America and product of Canada offerings. As I discussed last quarter, our strategy is not to import, but to invest domestically to expand production in local markets to serve local business. Within the residential sector, New construction remained soft in the second quarter. However, within this environment, we were able to grow residential roofing market share and gain volumes. We expect that seasonal patterns will support stable roofing demand in the second half of the year and over the long term. The need for housing in the U.S. will drive significant growth opportunity. Overall, we see mega projects leading the way. Growth trends from infrastructure modernization and onshoring of manufacturing to data center expansion and the digital economy are taking shape on the ground. -- and these projects have significant size and scale for MRIs. Let me share some examples of these mega projects underway. Our Elevate roofing system, which is ideally suited to support data centers is being installed at a massive new data center in Nest Texas, an area where we are also well positioned with our aggregates network. In Illinois, we are delivering aggregates and cement for a new data center build, and we have projects underway in virtually every region of our footprint. Advanced manufacturing and onshoring is also driving growth. In Arizona, we are supplying building materials to a large-scale semiconductor manufacturing plant now under construction. In Louisiana, we are delivering materials to multiple LNG facilities as energy infrastructure builds. Alongside these, we are supporting key transportation infrastructure projects across North America. In Canada, we are delivering to a massive multiyear organization of Montreal's airport and in New York, we are providing high-performance materials for the Hudson River tunnel. These are just some examples of our projects and new ones are kicking off every month. Later projects require our highest performing materials, manufacturing scale and the distribution network to deliver reliably. This is Amrize's strength and a key part of how we were able to achieve market-leading organic growth in the quarter. We are excited about the opportunities ahead to keep winning and delivering on new mega projects. Let's talk about our Aspire program. As we deliver for our customers, we are also driving synergies and operational excellence with our Aspire program. We delivered $29 million savings in the second quarter. We have hundreds of projects underway across raw materials, services, logistics and equipment and have now onboarded over 650 new suppliers, optimizing our third-party spend with competition and scale. We are on track with our savings for this year of $80 million as well as for our goal of $250 million through 2028. Let's talk about our growth investments. We invested $241 million in CapEx projects in the second quarter to expand production and to improve efficiency to best serve customers in the most attractive markets. We have completed a 660,000-tonne capacity expansion at our flagship cement plant in Missouri, the largest market-leading plant in North America with cement demand accelerating this expansion comes online at the ideal time for us. We also broke ground on the organization of our San constant cement plant in Quebec we expand production by 300,000 tonnes and improved efficiencies. In Texas, work is underway to add 100,000 tons of additional production capacity and our Midleton cement plant near Dallas. In Alberta, we are adding 50,000 tons of capacity to our actual cement plant outside of Calgary, where we are seeing growth driven by energy projects and new data center demand. In addition to our cement network, we are expanding and developing greenfield aggregate quarries across our footprint we currently have 5 for projects in multiple attractive markets across North America, adding more than 150 million tons of reserves. In Building Envelope, we are making progress on our new managing plant in Indiana. This new plan will be state-of-the-art, and we allow us to expand our footprint into a highly attractive Midwest and Eastern markets. Looking to our M&A. We are executing our strategy with a strong focus on synergies and growth markets. In July, we closed the acquisition of Rapid Ready Mix, a fast-growing concrete producer and data sport worth. This acquisition is expected to be EPS value accretive this year. Rapid Ready Max has a network of modern batch plants and mix of fleets and bring significant synergies with our aggregates operations and cement network in the region complementing the planned expansion of our vedotin cement plant. Our acquisition of PP Materials, the aggregates leader in West Texas is proving to be an excellent addition and is exceeding our initial expectations. These actions show how we coordinate our M&A and CapEx investments to connect our network and focus on high-growth markets such as Texas, where data centers, energy projects, infrastructure spending and population growth are driving demand. We are also delivering cash to our shareholders and returned $502 million to shareholders in the second quarter alone. We launched our $1 billion share repurchase program and repurchased EUR 197 million of MRE shares in the second quarter. Our dividend program is also running well. We paid $305 million of dividends including the special dividend for 2025 and the first quarter dividend of $0.11 per share earlier this year. Adding to this, the Ameris Board of Directors has declared a dividend of $0.11 per share for the second quarter to be paid on August 26. The Importantly, these dividends are paid out of capital contribution reserves and are not subject to Swiss reforming tax. I'm very pleased that our shareholder return program is executing well. We will continue delivering for our customers, investing for growth and returning cash to our shareholders. Now I'd like to turn it to Barish to review our quarterly financial results in more detail and discuss our full year guidance.

Thank you, Jan. As noted earlier, we delivered strong revenue growth of 8.6% in the quarter. As you saw increased mega project demand particularly from data centers and energy-related projects. At Giselevel, 6.7% organic growth drove the majority of the top line performance in the quarter. Volume growth was about industry trends for cement, aggregates and roofing, driven by our unique position in high-growth markets and successful commercial initiatives during the quarter. In addition to volume, we began seeing the benefit of price increases flow through during the quarter across our business segments. We saw strong aggregates pricing growth broadly supported throughout our geographies. Our premium cement price in Q2 of more than $171 per short ton improved sequentially from Q1. Finally, PV materials also contributed nicely to the results in the quarter, driven by solid demand in the high-growth led Texas region. Now review our adjusted EBITDA performance. In the second quarter, we grew adjusted EBITDA by 5.8% to $986 million. Volume growth was the key driver of our adjusted EBITDA performance in the quarter. as well as strong cement and exit pricing within our Building Materials segment. The strength of our sales volumes and pricing was particularly offset by higher-than-expected freight, diesel and raw material costs. This relates to 2 factors. First, oil price-driven inflation has resulted in a persistently higher cost environment. Additionally, we have seen a significant spike in U.S. freight rates over the past few months as capacity tightened in transport industry. While we had increased prices and added fuel surcharges there has been a timing difference between price realization and oil price-driven cost inflation across our businesses in Q2. As realization of previous price increases reached full run rate and additional price increases take effect we would expect better net price realization in the second half. Overall, we expect the price over cost gap to improve in the second half and turn positive in Q4 with improving trends as we enter 2021. I Meanwhile, our SPIRE program continues to gain momentum as we entered a seasonally stronger quarter, $29 million of savings in Q2 partially offset the cost headwinds we experienced. Finally, our adjusted EBITDA performance in the quarter was impacted by $17 million of higher net insurance proceeds in the prior year. Turning now to our results by segment. For Building Materials, we saw another quarter of strong cement and ages volumes, driven by increasing activity across commercial end markets, particularly data centers, and energy projects as well as steady infrastructure activity. Revenues were $2.4 billion in the quarter, an increase of 8.2% this increase in revenues was driven by organic growth of 5.6%. We saw above-market volume growth across our key product lines demonstrating our unique exposure to the most attractive regions and end markets, contributions from the PV Materials acquisition and industry-leading aggregates pricing growth also nicely contributed to the revenue. During the quarter, cement volumes increased 5%, driven by healthy demand in our U.S. markets. We saw double-digit volume growth in our supplementary cementitious materials during the quarter as we continue to invest in these raw material alternatives and cement additives. Agri volumes grew by 6.5% and driven by continued demand for aggregate intensive, commercial and infrastructure projects. It's worth noting that the volume growth for aggregates accelerated on a 2-year stack basis for the second quarter in a row. Cement pricing for Q2 was down 0.2% on a constant currency basis and grew 2.1% compared to Q1 as U.S. cement increases were put in place in April. Overall, we continue to see favorable pricing dynamics across our network, supported by our in-line positions in high-growth and attractive markets. We had strong aggregates pricing growth of on a freight-adjusted basis during the quarter. In April, aggregates price increases were successfully implemented, and we saw broad-based pricing growth throughout our geographies across both cement and aggregates, fuel surcharges were implemented in Q2 and partially offset the impact of oil price driven cost inflation. Building Materials adjusted EBITDA was million in the second quarter, up 5.2% compared to prior year. The increase in adjusted EBITDA was primarily due to continued volume growth, aggregate price increases contributions from KB Materials and Aspire savings. Our adjusted EBITDA performance in the quarter was impacted by higher freight and diesel costs. We also had a tougher comparison as we lap $17 million of higher insurance proceeds in Q2 of last year, which were primarily related to claims in 2024. As we look out to Q3, we expect to realize the full quarterly impact of price increases and fuel surcharges put in place during Q2 to continue expanding our markets. Additionally, our ready-mix operations will also put further price increase in the second half, we expect all these price increases to partially offset freight and diesel inflation in the back half of the year. As a result, you would expect better price over cost performance in second half compared to first half. Meanwhile, given the momentum we have seen across our cement and aggregates volumes since Q3 of last year, we continue to expect strong volume growth for both businesses in this year. However, given a tougher comparison, we expect year-over-year volume growth to moderate in the second half relative to the first half. Turning to Building Envelope. Second quarter revenues were $1 billion, an increase of 9.4% compared to the prior year. The increase was largely driven by a word market volume growth. We saw strong commercial roofing volumes driven by increased system selling and large-scale projects, including data centers and warehousing. We also continue to see resilient demand for commercial reroofing activity. As we said last quarter, new commercial roofing demand typically lacks roller commercial construction activity by 12 to 18 months. With strong new commercial construction in our Building Materials segment, we expect that to support an improvement in new commercial roofing demand as we move into second half, and we have begun seeing that trend in the early months of Q3. Turning to residential. We saw above market singles growth driven by investments in our commercial sales teams as well as distributor inventory stocking it's worth noting that the second quarter was the highest revenue quarter for our residential roofing business in our company history. We expect seasonal trends to support stable reroofing activity in the back half of the year and given the significant volume growth in Q2, we now expect our residential roofing volumes will be up high single digits this year. Strong commercial and residential volumes were partially offset by softer demand for better proofing products as they are more driven by new residential construction, which is down year-over-year. It's worth noting that these products represent about 10% of our building envelope business today. Building Envelope adjusted EBITDA was down 5.2%, representing a material improvement in the year-over-year trend compared to Q1. Year-over-year adjusted EBITDA performance was impacted by the timing differences between price realization and oil price-driven cost inflation, which included higher freight and raw material costs. This was partially offset by stronger volumes. We put price increases in place during April, May and June, including several roles for certain brands. We have also announced additional price increases that took effect in July and others will be effective in August. These price increases affect new projects we are quoting on with a natural timing difference until they take full effect across the business. Pricing improved sequentially throughout the quarter, but still remains down year-over we expect better price realization in the back half of the year as price increases continue to be realized on new projects. As a result, we expect better price over cost performance compared to the first half of this year. We have a strong balance sheet and investment-grade credit rating. As of June 30, 2026, our leverage ratio was 1.7x. We had approximately $729 million of cash and cash equivalents with $4 billion of total available liquidity. This financial strength, coupled with our investment-grade balance sheet, gives us significant liquidity to deploy capital for growth projects, acquisitions and return cash to shareholders. Our net interest expense is lower year-over-year, and we continue to expect our net interest expense to be roughly million for the full year. Our track record of generating high free cash flow, coupled with a strong balance sheet, puts us in an excellent position to return cash to shareholders. Moving to our full year guidance. Let's review our key drivers. From a demand perspective, we are well positioned across our markets and in both business segments. Within Building Materials, we had a good first half of the year with strong revenue growth and 8.4% growth in adjusted EBITDA. For the full year, we continue to expect durable volume growth in cement and aggregates. We now expect cement pricing to be flat or up low single digits, and we continue to expect aggregates pricing to be up mid-single digits on a freight-adjusted basis, in Building Envelope, we improved revenue and operational performance as the first half of the year progress. We continue to expect low single-digit growth in commercial roofing volumes and now expect high single-digit volume growth in residential roofing for the full year. As discussed earlier, price increases are phasing in across the Building Envelope portfolio. Finally, the Aspire program remains a key priority and we are making excellent progress. We are on track with our targets and expect further savings in the second half despite the demanding procurement. Let's look at how these drivers will now play out in the second half of the year to reach our adjusted EBITDA range. The headline here is that while we expect stronger price momentum in the second half, the timing differences between price realization and oil price-driven cost inflation will be a headwind to our full year 2026 earnings. For the full year, we are expecting a positive contribution from strong volumes of $150 million to $170 million. And on top from the price increases we are putting in place throughout the year, $60 million to $80 million in price due primarily to the revenue escalation and persistence of oil price-driven cost inflation we are now expecting approximately $140 million to $170 million in higher cost. This shows up in high freight, diesel and raw material costs. In both businesses, while additional price increases and fuel surcharges are expected to be realized in the second half and improved pricing over cost compared to the first half, the timing of price realization and surcharges will affect our overall profitability for. We expect both business segments to have a better price over cost performance in the second half compared to the first half and turn price or cost positive in the fourth quarter, with improving trends as we enter 2020. Our structural savings program, Aspire will contribute approximately $80 million of expire savings and M&A will be another $30 million to $50 million on top of that. Lastly, this year, we are also lapping 2 significant insurance recoveries in the second and fourth quarter of 2025 that created a net headwind of approximately $55 million. With all these factors combined, let our updated full year 2026 guidance. Given the strong demand and pricing environment, we are increasing our revenue guidance to $12.5 million to $12.7 billion. As discussed, we are revising our adjusted EBITDA guidance to $3.1 billion to $3.2 billion. Overall, our business is in a strong position. Cement and aggregates are in high demand. Our Building Envelope brands are improving performance as the year progresses. Pricing increases are building momentum, as fire is kicking in and we're strengthening operational efficiency. With that, we look forward to your questions, and I will pass the mic over to our operator.

[Operator Instructions] Our first question will come from Anthony Pettinari with Citi.

Your full year outlook indicates cement prices should rise in the second half. And I'm just wondering if you could talk a little bit more about the confidence driving that, given the lack of traction in the first half? And just to clarify, are these sort of new hikes that are going out? Or are these sort of existing first half hike that is just being implemented more slowly?

Anthony, yes, I mean it was our target to have traction on the cement pricing this year. We had a slow start to the year. And you remember that we have our majority of price increases executing on April 1. And we see track while on Q2 year-over-year, we are slightly down, I think, 0.2%. We have a 2.1% increase in prices over Q1. So that makes me quite confident that we will see good and improved pricing in the second half of the year. We've also noticed when you followed some of the other applications of peers that a 0.2% decrease in pricing Q2 year-over-year is the best market in the industry. mostly others reporting minus 1% to minus 3%. We are not happy with this. And now we have a sequential price increase 2.1%. And I believe we will we're guiding now for a flat to low single-digit pricing. But I'm confident we will have a low single-digit cement pricing in the second half of the year.

Our next question will come from Adrian Huerta with JPMorgan.

Thank you. And thank you for the additional color that you're bringing into the quarter that we did not have before. We really appreciate that. My question has to do with the how do you see the M&A outlook, Jan? Do you guys are working already on something? How do you see the pipeline over the next 6 to 12 months on M&A? That's my question.

Yes, Adrian, thanks for the question. We're always talking on potential transactions. So happy also to see that there's quite some M&A activity in the sector. Our pipeline is healthy and growing across both building materials and billion loads. And I expect more M&A to come I think we bought 2 great companies. We have the materials beginning of the year, fantastic market leader in mass Texas growing above expectations and already have a significant contribution to this year's results. And we just signed on the 31st of July, we closed the deal with rapid Ready-mix and that is for work complementing our network when it comes to cement and aggregates. So with our deals, as you know, we are very value accretive. So very happy with these 2 deals and expect we are working on more needs to come.

Our next question will come from Trey Grooms with Stephens.

So my question is on building envelope. So the residential side of building envelope looks like it's holding in very well and performing very well. I wanted to first get your thoughts on kind of the volume there? Is it share wins or just the drivers there. And then you've talked about price realization in April, May and June, you've got additional increases. It sounds like that are coming in as well, July and August. So you're going to have better price realization in the second half. But I guess the question there is, at what point do you think you'll get to kind of that price cost neutral position in building envelope. I know we were targeting, I think, 3Q it sounds like it might be pushed out a little bit. Anyway, if you could just talk about those 2, both the demand side of things as well as price cost and building envelope.

Thank you for the questions. Look, first of all, I'm very happy that we achieved more than 9% sales growth in the second quarter. in building envelope. As you know, we had a tough quarter 4, the tough quarter 1 with negative volumes I'm very happy that our people based on a lot of commercial initiatives went back to growth and even gained market share. That was important to us. Then second, we are working very hard to be it cost positive. It's as you know, it's an uphill battle when you have those very steep oil oil-related inflation. So suddenly, so we feel it in transportation heavily, but then also the raw materials for the input costs. So we have already a few price increases out there. We have more pain business to come and then plus transportation surcharges. So we're working very hard. We saw a sequential improvement in our prices coming into effect from Q2 over Q1. And now with the further announced price increases in July and August, we expect a positive trajectory and pricing cost to continue into H2.

Your next question will come from Bryan Blair with Oppenheimer.

Something that we could level set a bit more on price cost assumptions, specifically versus your prior guidance framework. How much of the incremental headwind is driven by lower price realization versus higher cost? And how should we think about the impact by segment going forward?

Bryan, I think Barish made a very good analysis on on the bridge here for margins, EBITDA. Maybe Barish, if you want to take the question and give us some more details on the segments and overall MRAs.

Our guidance is entirely related to the duration and magnitude of oil-driven cost inflation and timing of the price realization. This impacts all segments what gives us confidence is the strong volume momentum as well as the realization of price increases in Q2 so far. If you look at our guidance change, there are primarily 3 factors that are driving it. First, the impact from the lag between building envelope pricing and cost inflation of both raw materials and freight was more promise than we had initially expected. This represents roughly 1/3 of the guidance change. Second, in Building Materials, our cement pricing expectations for the full year were a little bit lower than previously expected. This represents another 1/3 of the guidance change. We had geographical mix impact in Q2 that resulted in a slightly a slight impact on a year-over-year basis. but we are confident that we have the best pricing out there. Third, finally, in Building Materials, fuel surcharges have been realized and helped offset the diesel impact, but have not fully offset the incremental impact from the higher freight rates. As you know, the freight has been going up quite robustly in the U.S., the trade costs. This represents the final 1/3 of the guidance change. While we expect strong price momentum in the second half and the timing differences between these price realizations and cost inflation will be the headwind to our 2026 earnings. Again, 1/3 coming from Building Envelope and 2/3 is coming from Building Materials.

Our next question will come from Keith Hughes with Truist.

Question is in building envelope. Your guidance seems to imply kind of a flattish revenue number in the second half of the year. And with what sounds like some pretty good residential business coming in, that would imply there would be some pressure on volumes in the second half of the year. Am I reading that right? Would we expect volumes to be a little lighter, particularly after such a good second quarter.

It, actually, to be precise in commercial, we expect some growth from our project pipeline and the backlog to continue. So the commercial project, which broke ground in 2025, really to increase in roofing volumes for us in H2. So our full year guidance is low single digit overall from commercial roofing volumes, and that remains unchanged. In residential, we have quite some momentum at the moment. We expect also a normal seasonal pattern to support stable reroofing in the second half and so we now expect volumes to be higher than originally to be up high single digits for the full year compared to flat volume forecast we gave earlier this year.

Your next question will come from Martin Husler with ZKB.

Yes. Thank you. And I hope you can hear me. So my question is about the the volume trend, which I think is a bit better than what you expected at end of April. However, the margin trend is a bit more negative. I wonder if you also see a certain, let's say, mix deterioration as you might go for larger projects, which have a negative impact on margins, obviously, mainly for building materials.

Martin, first of all, we are very excited. I think especially the organic growth rate of 6.7%. The second quarter is is, I would say, clearly above our expectations and also the backlog we have and the active quoting we do for new projects is gives us great confidence for the future. We don't have a negative mix effect to make it short. If you look at our pricing, we have the stable cement price year-over-year. As I mentioned before, we have a sequential price increased 2.1% in the second quarter of the over Q1, as I think that's excellent. And then the same in aggregate, I think we have the reporting of 4% average price increase in the second quarter year-over-year and here, we stick to our year guidance of mid-single digits. So we have excellent pricing. I think, Martin, if you look at the bridges we provide, the let's say that the EBITDA is not growing over proportional to the sales growth is really based on the order and cost inflation. If we didn't have that geopolitical disturbance starting in March, we would have very healthy EBITDA margins for the second quarter.