# CRH plc (CRH) — Financial Analysis

**Exchange:**   
**Coverage as of:** 2026-Q2  
**Updated:** 2026-06-04  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/CRH/thesis · /stocks/CRH/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: CRH
step: 04
title: Financial Quality & Adversarial Sweep
created: 2026-06-04
---

### Step 04 — Financial Quality & Adversarial Sweep: CRH plc (CRH)

#### 1. Statement Quality Assessment

##### Accounting Policy Review

**IFRS → US GAAP Transition (FY2023):** CRH transitioned from IFRS to US GAAP effective January 1, 2023. The FY2023 10-K includes comparative restatements. Key adjustments include: [S1]
- Goodwill amortization: Under IFRS, goodwill is not amortized (only impaired); under US GAAP, goodwill was also not amortized (ASC 350), so this was neutral
- Lease accounting: minimal practical impact as IFRS 16 and ASC 842 are broadly aligned
- Pension accounting: minor reclassification differences
- Revenue recognition: no material differences under IFRS 15 vs. ASC 606

**Assessment:** The IFRS → US GAAP transition was relatively clean with no material distortions to the underlying financials. The primary accounting complexity for CRH analysis is the heavy use of **Adjusted EBITDA** as a non-GAAP measure.

##### Adjusted EBITDA Quality

CRH's reported Adjusted EBITDA ($7.7B FY2025) adds back numerous items beyond D&A: impairments, divestiture gains/losses, pension non-service costs, substantial acquisition costs, and net other interest. [S2]

**Reconciliation quality check:**
- GAAP Net Income: $3,790M
- EBITDA (GAAP, ~): $7,681M [reconciliation from XBRL data + MD&A]
- The primary add-backs are: D&A ($2,156M) + $~36M impairments/other
- Adj. EBITDA margin (20.5%) is close to GAAP EBITDA margin (~20.5%) — a positive quality signal
- **Adj. FCF ($5.0B)** vs. simple OCF-CapEx ($2.9B): The $2.1B gap reflects working capital methodology differences and lease payment treatment. This is a significant divergence that analysts should note — the simple FCF figure is more conservative and arguably more relevant for valuation.

**Risk:** Management uses Adj. FCF conversion >100% as a key metric. This uses the management-defined $5.0B figure, not the simple $2.9B. The true free cash flow to equity available for capital return is closer to $2.9–3.5B depending on working capital definition. [S3]

| Cash Flow Metric | FY2025 |
|-----------------|--------|
| GAAP Operating Cash Flow | $5,723M |
| Capital Expenditures | ($2,713M) |
| Simple FCF (OCF - CapEx) | $3,010M |
| Management Adj. FCF | $5,000M |
| Difference | $1,990M |

##### Goodwill & Intangibles

CRH carries significant goodwill (~$23–25B estimated as of FY2025) arising from decades of acquisitions. Goodwill represents ~40-45% of total assets. [S4]

**Impairment risk assessment:**
- FY2025: $40M impairment (principally International Solutions) — modest vs. total goodwill
- FY2024: $161M impairment
- FY2023: $357M impairment — largest in recent history
- No single large impairment suggesting undisciplined acquisition pricing
- CRH's M&A track record (ROIC consistently above WACC) reduces impairment risk

##### Effective Tax Rate

CRH has a relatively stable effective tax rate of 22–23%, reflecting its Irish domicile and international structure. The US corporate tax rate (21%) applies to the majority of income, offset by deferred tax benefits and Irish holding company efficiencies. A US minimum tax rate increase would be a risk, though CRH benefits from significant domestic (US) manufacturing activity deductions. [S5]

#### 2. Key Financial Quality Metrics

| Metric | FY2023 | FY2024 | FY2025 | Trend |
|--------|--------|--------|--------|-------|
| Gross Margin | 34.2% | 35.7% | 36.3% | ↑ Strong |
| EBITDA Margin (adj.) | 17.7% | 19.5% | 20.5% | ↑ Strong — 12 consecutive years expanding |
| OCF/Net Income | 1.63× | 1.44× | 1.51× | ✅ OCF > NI consistently |
| FCF Yield (simple) | 4.5% | 3.5% | 4.3% | Acceptable |
| D&A / Revenue | 4.7% | 5.1% | 5.8% | Rising — driven by Adbri + Eco Material acquisitions |
| CapEx / Revenue | 5.2% | 7.2% | 7.2% | Elevated (growth CapEx phase) |
| Interest Coverage (EBITDA) | 16.5× | 11.3× | 9.5× | Declining — net debt rising |
| Net Debt / EBITDA | 0.9× | 1.7× | 2.0× | Rising — within management target 1.5–2.0× |

**Interest coverage concern:** Coverage has declined from 16.5× to 9.5× as debt has grown. While 9.5× is still comfortable, further large acquisitions without proportional EBITDA growth would reduce headroom toward the management's implied ~6-7× floor. [S6]

#### 3. Balance Sheet Quality

| Metric | FY2023 | FY2024 | FY2025 | Assessment |
|--------|--------|--------|--------|------------|
| Current Ratio | 1.70 | 1.28 | 1.59 | ✅ Adequate |
| Total Debt | $13.1B | $15.6B | $19.7B | ⚠️ Rising rapidly |
| Net Debt | $6.8B | $11.8B | $15.6B | ⚠️ 2.0× EBITDA |
| Total Equity | $22.0B | $22.3B | $24.8B | ✅ Growing |
| Goodwill % of Assets | ~48% | ~50% | ~45%+ | ⚠️ High but stable |
| Debt-to-Equity | 0.60 | 0.70 | 0.79 | Within limits |

CRH's balance sheet reflects an M&A-intensive strategy. Total debt grew $6.6B from FY2023→FY2025. The company maintains investment-grade credit ratings (Baa2/BBB+) and explicitly manages to 1.5–2.0× Net Debt/EBITDA. [S7]

#### 4. Adversarial Research Sweep

*Note: Earnings transcripts not available (coverage-next-full path). Adverse findings are sourced from web research, SEC filings, press releases, and news.*

##### A. Environmental & Permitting Litigation

CRH faces routine environmental enforcement actions and permitting disputes across its 3,961 locations. These are inherent to quarrying and cement operations and are disclosed as contingent liabilities in the 10-K. No single proceeding is described as material in FY2025. The company carries environmental reserves consistent with its operating scale. **Assessment: Normal operating risk, not adversarial.** [S8]

##### B. European Competition Authority Investigation

CRH's European businesses have historically faced competition authority investigations related to aggregates/cement market practices. The most notable was a 2016 EU investigation into Irish cement pricing; this matter was resolved. No material new EU competition investigations are disclosed in the FY2025 10-K. **Assessment: Historical risk; no active material investigation.** [S9]

##### C. Acquisition Overpayment Risk (Bear Concern)

Several analysts have flagged the rising net debt as evidence of potential acquisition discipline erosion. The Eco Material acquisition ($2.1B) was at an undisclosed multiple; SCM is a nascent market with unproven volume scale. The Adbri acquisition (Australia, majority stake 2024) closed at a time when Australian construction activity was decelerating. **Assessment: Legitimate risk; management's ROIC track record provides reasonable offset, but bears have a valid concern that the acquisition cycle is getting more expensive.** [S10]

##### D. PFAS / Emerging Contaminants

CRH's stormwater management products (BIS segment — pipes, drainage) contain no known PFAS liabilities per 10-K disclosure. However, evolving EPA PFAS standards could require reformulation of certain construction materials used on CRH's worksites. **Assessment: Low direct liability; emerging watch item.** [S11]

##### E. Irish Domicile / Tax Risk

CRH is domiciled in Ireland. Changes to OECD Pillar Two global minimum tax (15%) could affect CRH's effective tax rate in future years. Management acknowledged this risk but does not expect a material impact given CRH's already ~22–23% effective rate. **Assessment: Manageable; ETR upside risk is modest.** [S12]

##### F. Short Seller History

Research conducted via web search found no active short-seller reports specifically targeting CRH as of the date of this research (June 2026). Short interest is 2.24% of float — very low, indicating limited bearish institutional conviction. CRH has not been the subject of a major short-seller attack in recent years. **Assessment: No adversarial short-thesis active.** [S13]

#### 5. Summary Assessment

| Dimension | Grade | Notes |
|-----------|-------|-------|
| Revenue quality | A- | Recurring, diversified, infrastructure-weighted |
| Margin quality | B+ | Strong underlying expansion; EBITDA add-back complexity warrants scrutiny |
| Cash flow quality | B | Simple FCF ($3B) meaningfully below management adj. FCF ($5B); gap requires monitoring |
| Balance sheet | B- | Rising leverage within targets but less headroom than FY2022-23 |
| Accounting quality | A- | Clean IFRS→GAAP transition; conservative goodwill impairment history |
| Adversarial findings | Pass | No material active litigation, short campaigns, or fraud indicators found |

**Overall financial quality: B+ / Investment Grade.** The primary area of scrutiny is the growing leverage and the definition of "Adjusted FCF." These are not disqualifying but require active monitoring.

#### Source Index

| ID | Source | Description |
|----|--------|-------------|
| S1 | 10-K FY2023, Note 1 | IFRS to US GAAP transition accounting policies |
| S2 | 10-K FY2025, Non-GAAP Reconciliation | Adjusted EBITDA and Adj. FCF definitions |
| S3 | StockAnalysis.com cash flow statement | FCF reconciliation data |
| S4 | StockAnalysis.com balance sheet | Goodwill estimates |
| S5 | 10-K FY2025, Tax note | Effective tax rate |
| S6 | StockAnalysis.com ratios | Interest coverage, leverage ratios |
| S7 | 10-K FY2025, MD&A; consensus.md | Credit ratings, leverage target |
| S8 | 10-K FY2025, Contingencies note | Environmental disclosures |
| S9 | Web search | EU competition history |
| S10 | consensus.md; investor day 2025 | Bear case on acquisitions |
| S11 | 10-K FY2025, Risk Factors | Emerging contaminants |
| S12 | 10-K FY2025, Tax note | Pillar Two tax risk |
| S13 | Web search | Short interest data, StockAnalysis statistics |

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/CRH/fundamental

## Navigation

- Overview: /stocks/CRH
- Financials (this page): /stocks/CRH/financials
- Thesis: /stocks/CRH/thesis
- Investment Memo: /stocks/CRH/memo
- Coverage universe: /stocks