Amrize - Earnings Call - H1 2025

Transcript

Operator (participant)

Hello, and welcome to the Amrize Q2 2025 Earnings Conference Call. We ask that you please hold all questions until the completion of the formal remarks, at which time you'll be given instructions for the question and answer session. Also, as a reminder, this conference call is being recorded. If you have any objections, please disconnect at this time. I will now turn the call over to Scott Einberger, Investor Relations Officer for Amrize.

Scott Einberger (Investor Relations Officer)

Thank you, and good morning, everyone. Welcome to Amrize's Second Quarter 2025 Earnings Call. Amrize spun off from Olsson and listed on the New York Stock Exchange on June 23, and we are very excited to be with you today for our first earnings call. We released our second quarter 2025 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, investors.amrize.com. On the call with me today are Jan Jannis, our Chairman and CEO, and Ian Johnston, our CFO. Jan will open today's call with highlights of our second quarter results and how Amrize is uniquely positioned to capture growth in a more than $200 billion addressable market. Ian will then review our financial performance before turning the call back to Jan for our outlook.

We will then be ready to take your questions. Before we begin, during the call and in our slide presentation, we referenced certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures to GAAP in our earnings release and slide presentation. 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 Form 10 and other reports filed with the SEC. We disclaim any undertaking to publicly update or revise any forward-looking statements. With that, I will now turn the call over to Jan.

Jan Jenisch (CEO and Chairman)

Thank you, Scott, and thank you, everyone, for joining us today for our first earnings call at Amrize. Just about six weeks ago, we had an excellent start with our spin-off and our listing on the New York Stock Exchange and the Swiss Exchange. With the execution of our spin-off, we are ready to begin our next chapter as the partner of choice for the professional builders of North America. In the second quarter, we successfully navigated a challenging environment, generating stable returns and strong margins. This shows the resilience and the strength of our business and our market positions. With a growing audible, we delivered for our customers to advanced projects across infrastructure, commercial, and residential sectors, and from new builds to repair and refurbishment. On supporting our customers, we launched our Aspire program to drive synergies to consumer business, improve efficiency, and expand our margins.

We continued to invest in our growth through both CapEx and value-accretive M&A. We successfully established an investment-grade balance sheet with substantial firepower to fuel our next chapter of growth. The steps we are taking from investing to driving synergies across the business provide the foundation for us to capitalize on the strong long-term demand across our $200 billion addressable market. Let's look at slide five of the Q2 Financial Results. We generated stable revenue and strong margins. Our two business segments delivered strong performance, and our consolidated view now includes standalone corporate costs as Amrize. These resilient results in a challenging market demonstrate the strength of our market positions, our disciplined pricing, and our focus on execution. Let's move to slide six of market trends. Turning to the markets, uncertainty and weather impacted construction activity in the second quarter.

In commercial, data center expansion was a bright spot, and commercial spending on major projects like energy plants continued to be strong. However, market uncertainty and high interest rates impacted the timing of capital spending and new project starts. In the infrastructure end market, the market has proven resilient as federal, state, and local governments continue to prioritize these projects. In the residential sector, high interest rates and affordability concerns are limiting new construction. Our second quarter activity was soft. There is substantial pent-up demand ahead of us. We are not seeing projects being canceled. The current environment is simply affecting timing. As uncertainty subsides and the interest rate environment improves, we see significant upside potential for Amrize. Infrastructure modernization, onshoring of manufacturing, and the need to bridge the housing gap will drive strong long-term growth across our markets.

Data center expansion, in particular, continues to be an area of growth for us, with new projects kicking off across North America to support AI. It is estimated that the U.S. alone will build about 600 new data centers through 2027. For Amrize, that brings opportunity not just in the foundation of the data center, but in the rooftop, the wall systems, and to support all of the infrastructure surrounding the data center to make it work. Looking forward, we are well positioned for long-term growth. Let's look at slide seven and our key investments in the second quarter. We continue to invest through CapEx and value-accretive M&A. In June, we acquired the operations of Langley Concrete, expanding our precast concrete footprint with two state-of-the-art facilities in British Columbia and strengthening our market position in Canada's rapidly growing infrastructure sector.

In Oklahoma, we opened a greenfield quarry with 200 million tons of reserves, expanding our aggregate business in the fast-growing Dallas-Fort Worth market. In Virginia, we broke ground on a new fly ash facility to enable the use of recycled landfill ash as a high-quality supplementary material. We expect to produce 8 million tons of fly ash from this facility in the coming years. We are also on track with organic growth projects. On slide eight, we are making progress with those projects, which are key for our growth in the future. We will add significant capacity and further improve manufacturing efficiency at our flagship SenGen plant, North America's largest and market-leading cement plant. For our Malarkey shingles, we will open a new state-of-the-art factory in Indiana to increase production capacity by over 50% and expand our market share in the attractive Midwest and Eastern markets.

At Saint Constant in Quebec, we are expanding to increase capacity, improve manufacturing efficiency, and to strengthen Amrize's market position in Canada. Overall, now as a standalone company, we are fully focused on the attractive North American market, and we will accelerate our growth investments into the future. Let's talk about our customers on slide nine. We are delivering for our customers on their most important projects in every U.S. state and Canadian province. In the quarter two, we announced a partnership with Meta to deliver AI-optimized concrete for their new data center in Minnesota, and we are working on data centers built across the U.S. for several hyperscalers. In Canada, we are supporting the upgrade of the Vancouver International Airport. With infrastructure modernization continuing, we have important work supporting airport upgrades from Vancouver and Calgary to New Orleans, Charlotte, and New York.

We also play a role in extending the life of critical national assets like the USS Gerald Ford, where our advanced GEICO coatings were used to repair its carrier decks. Our elevator team completed a new stadium in North Dakota with our high-performance EPDM roofing system. Across our markets, we have a strong pipeline of such projects. From bridges and tunnels to data centers, schools, offices, and homes, our solutions are inside all of the essential buildings and infrastructure that connect people and advance our will. On slide ten, we inform you about the launch of our new Aspire program. To accelerate synergies and profitable growth, we have launched this Aspire program where we leverage our scale across 1,000 sites and our two business segments to optimize third-party spending and drive efficiencies in our operational footprint and logistics network.

We have formally launched the program and have already started making progress across raw materials, services, logistics, and equipment. We target to achieve $250 million in cost savings by 2028, delivering over 50 basis points of margin improvement per year. We expect to begin achieving incremental savings in the second half of this year with the full annual savings run rate starting in 2026 as we build momentum. Taking a step back and looking across the enterprise and the markets we serve, we are confident in our future as Amrize. With our spin-off and listing on June 23, we are starting our journey from a position of strength with market-leading operations, advanced solutions, a strong balance sheet, and growing markets. With that, I will turn it over to Ian to review our finances.

Ian Johnston (CFO)

Thank you, Jan. It's great to be with all of you for our first earnings call. Amrize's journey as an independent company is just beginning, and I'm excited for the opportunities we have to grow our business and drive shareholder value in the years ahead. On slide 13, you'll see a consolidated view of our financial results. Our Q2 financial results were stable in light of market uncertainty and inclement weather, which is impacting the timing of new construction projects. The second quarter consolidated revenue of $3.2 billion was in line with the prior year, with acquisitions contributing 1.3% to revenue growth. Volumes improved as the quarter progressed and weather conditions became more favorable. Our customers continue to report healthy backlog of projects, particularly in the infrastructure and commercial end markets. We expect this backlog of projects to be a tailwind to volumes later this year and into 2026.

Adjusted EBITDA for the quarter was $947 million, including $42 million of standalone corporate costs. Excluding the impact of these additional corporate costs, our second quarter adjusted EBITDA margin was 30.7% compared to 30.9% in the prior year. Scale and local P&L ownership models are a competitive advantage and allow us to effectively manage costs during periods of time when the industry is experiencing lower demand. As we build the corporate structure needed to operate Amrize as an independent company, we expect to incur additional costs that are not reflected in our 2024 financial results. For the full year 2025, we expect approximately $150 million of additional costs compared to full year 2024. If you apply these additional corporate costs, our financial results would have been approximately $3.07 billion in 2024. For comparison purposes, we have provided a quarterly view of 2024 adjusted EBITDA in the appendix of our deck.

Turning to slide 14, moving to our results by segment, building materials reported second-quarter revenue of approximately $2.3 billion in line with the prior year. We are seeing a healthy level of activity in the public infrastructure sector, supported by both federal and state spending packages. We estimate that approximately 50% of IRA JA funds have been allocated to date, and only roughly 40% of these funds have been deployed, providing a runway for growth well into the future. In the commercial market, we are seeing strong demand for data centers and other markets. All capital spending on warehouse and manufacturing facilities has been slower to deploy. Fundamentals in the commercial market are positive, and we continue to see long-term demand from onshoring trends and an increase in domestic manufacturing. In the residential market, new construction activity remains below historical levels. The housing gap in the U.S.

is close to 5 million homes and will need to be addressed in the coming years. We believe this will act as a catalyst for new construction activity as the interest rate environment becomes more autonomous. Adjusted EBITDA margin for the quarter was 33.7% versus 33.9% in the prior year. Disciplined pricing and a highly cost-efficient distribution and logistics network resulted in strong margins in a softer volume environment. Pricing gains helped to offset the impact of lower volumes of the quarter, with positive year-over-year pricing for both cement and aggregates, speaking to the strong pricing fundamentals in these markets. In our building envelope segment, second-quarter revenue was $970 million in line with. The AUX engineered products acquisition contributed $33 million to revenue in the quarter.

All of the demand in the commercial repair and refurbishment market and the revenue contribution from AUX is offsetting the impact of market uncertainty and higher interest rate impacts on new construction sites. Weather events and the increasing age of many roofs have been key drivers of repair and refurbishment demand, and we expect these will continue to be key drivers of growth in the coming years. Adjusted EBITDA margin for the quarter was 26.9% compared to 27.1% in the prior year. Our disciplined pricing strategy and effective management of our cost base in a challenging market environment resulted in price over cost being stable for the quarter. As Jan mentioned, we have launched our Aspire program and expect the synergies we generate from this program will have a benefit to margins in the future.

I'm pleased to report that during the quarter, we successfully closed a $3.4 billion note offering and a $1.9 billion bond exchange. Our capital structure also includes a $2 billion commercial paper program and a $2 billion revolving credit facility. At the end of the second quarter, we have not drawn on the revolving credit facility and had $930 million drawn on the commercial paper program. We finished the second quarter with a net leverage ratio of. Times. We are beginning our journey as Amrize in a position of strength with a healthy balance sheet and investment-grade credit ratings from both Moody's and S&P. As a reminder, we typically generate the majority of our cash flow in the second half of the year.

We expect to finish the year with a net leverage ratio below 1.5x, leaving us well positioned to invest in both organic growth opportunities and pursue value-accretive M&A. Strong cash flow generation of our business allows us to pursue a growth-focused capital allocation strategy. As Jan highlighted, we are investing in several projects that we expect will drive future organic growth, and we have a number of additional projects in our pipeline. We also expect to deploy available cash towards M&A opportunities, similar to the recent closed acquisition of Langley Concrete Partners. It's an excellent example of our value-accretive acquisition strategy at work. Our M&A pipeline remains healthy, and our management team has a track record of executing a disciplined value-accretive M&A strategy. We expect to begin returning capital to shareholders in 2026. We'll be working with our Board of Directors in the coming months on a dividend and share repurchase program. I'll now turn this over to Jan to close.

Jan Jenisch (CEO and Chairman)

Thank you, Ian. On slide 18, we are providing our 2025 financial targets. For the full year, we expect revenues to be in the range of $11.4 billion-$11.8 billion, adjusted EBITDA to be in the range of $2.9 billion-$3.1 billion, and a net leverage ratio below 1.5x. While the first half of the year has been soft, and we are forecasting a modestly better second half, we are beginning to see early positive indicators, and July was a good month with improved volumes. We see a significant pent-up demand, and once interest rates are lowered and the environment stabilizes, this will serve as a big trigger point to unleash growth. However, today it's difficult to predict the exact timing of the inflection point, but in our view, it is a question of when and not if.

During this period of softer demand, we are taking all of the right steps and focusing on what we can control to outperform and position for the future. Our portfolio is well positioned. Our footprint is unparalleled. We have a strong pipeline of CapEx projects and M&A and the markets we serve have strong underlying growth fundamentals. We are well positioned for long-term growth, and we are confident in our mid-term targets. With that, I will pass it back to Scott to begin the Q&A.

Scott Einberger (Investor Relations Officer)

Thank you, Jan. Currently, we are now ready to begin the Q&A. Can you please explain the process for asking a question?

Operator (participant)

Thank you. At this time, if you would like to ask a question, please click on the raised hand button, which can be found on the black bar at the bottom of your screen. When it's your turn, you'll receive a message on your screen from the host allowing you to talk, and then you'll hear your name called. Please accept only your audio and ask your question. As a reminder, we are allowing analysts one question today. We will wait one moment to allow the queue to form. We'll take our first question from Adrian Huerta from JPMorgan. Please unmute your line and go ahead.

Adrian Huerta (Analyst)

Thank you. Good morning, everyone. Can you hear me?

Scott Einberger (Investor Relations Officer)

Yes, we can.

Adrian Huerta (Analyst)

Excellent. Thank you for taking my call, Jan. My question has to be related to the guidance. Definitely, you're expecting a better second half marginally on revenues, with revenues somewhat flat for the second half, but with a much better improvement on the EBITDA side, with EBITDA just down a little bit. How much of that improvement in the second half is basically coming from the Aspire program that you have? What is the size of savings that we could already see in the second half from this program that you have?

Jan Jenisch (CEO and Chairman)

Hey, good morning, and thank you for the question. Yes, we are very happy how we started with the Aspire program in June, and we see already quite some improvements there. This will be a contributor already for H2. We don't disclose how much it will be for the second half of this year, but it will be on the way then to achieve full run rates for 2026. Overall, I think, as I explained a bit in the outlook, we expect that the volume trends have been encouraging already in July. While there is still a fair amount of uncertainty in the market, the backlog of projects gives us confidence that the second half of the year will be stronger and better than the first half of the year.

Adrian Huerta (Analyst)

Thank you, Jan.

Operator (participant)

Our next question comes from Caesar Ebeling from Morgan Stanley. Please unmute your line and go ahead.

Thanks very much. Good afternoon, gentlemen. Or good morning, gentlemen. I just wanted to come back on your cash generation and the net debt at the end of the first half. The cash generation seems to have been quite disappointing in the first half. I see you've had quite a big build in receivables. Can you talk about why that is? I know that there is seasonality in the business, but it seems that the build is even in excess of that. If I look at the change in cash during the first half, I'm struggling to get back to what the pro forma balance sheet was in the Form 10 at the end of 2024.

I know that the Form 10 was never a hard and fast starting capital structure for Amrize, but there seems to be quite a big deviation, like over $1 billion, relative to that pro forma structure at the end of 2024. Maybe you can just help me understand why the net debt at the end of 2024 for Amrize seems to be so much different to what we were sort of looking at in the Form 10 and talk to cash generation for the rest of the year. Thank you.

Ian Johnston (CFO)

Hi, Caesar. Thanks for your questions. Maybe a couple of comments as we go through. I'll start with the free cash flow. You're correct. Free cash flow is down versus the same period this time last year on a year-to-date basis. A combination of a couple of factors. First off, on the working capital, obviously, a little bit of an increase in the later part of Q2 revenue. That drove some of our increase in AR build, which will become due and collectible at the early part of Q3. That has a slight impact. We also have an increased amount of inventory, somewhat due to the lower volumes in the quarter. We would expect that our big sales season is ahead of us and production buildup on inventory. The other issues to note, cash taxes are somewhat out of step with Q4 last year.

We had a timing delay in terms of cash taxes, so that's slipped over into 2025. Lastly, we have increased CapEx that Jan Jannis mentioned in the earlier comments at the beginning. We continue to have investments in our SenGen expansion and our market plan, and our CapEx is up in the quarter and on a year-to-date basis. Regarding the pro forma financials, our net debt, we reported it at the end of Q2. This is now a fully independent balance sheet. We have the restructuring and the issue of our corporate bonds at the beginning of April, and then our net debt, our bond exchange in the latter part of Q2. Financial statements today are a perspective of a fully independent position, and obviously, there's a seasonality to our business in terms of our net cash. End of the year 2024, with the same view as we would have at the end of this year, total cash balances would be much higher than they are at the midpoint of the year. That's possibly the decision.

Would it be possible, and I don't know if you can give these numbers, would it be possible to tell us what the 2024 net debt number was for Amrize as a standalone entity rather than the numbers we had in the pro forma, just so we have a clean base? Because we still don't have the sort of 2024 net debt number, I don't think.

The pro forma was what we presented as.

That's the best.

Yeah, that's the best start. That's the figure. In 2025, we're guiding towards a net debt figure below 1.5x on our guidance.

Okay. The 2024 number is going to be materially different than that $3 billion that was in the Form 10. I think the number pro forma was about $3 billion at the end of 2024.

Yes.

That could be wrong. That's what I remember seeing.

I think the net debt position that we have right now is around $5.3 billion, and we're guiding towards the $1.5 billion by the end of this year.

Okay, thanks very much for the cut. I appreciate it.

Operator (participant)

Our next question comes from Pujarini Ghosh from Bernstein. Please unmute your line and ask your question.

Pujarini Ghosh (Analyst)

Hi. Can you hear me?

Jan Jenisch (CEO and Chairman)

Yes, we can, Pujarini. Please go ahead.

Pujarini Ghosh (Analyst)

Thanks a lot. Yeah. I wanted to talk about the envelope business. As you mentioned, the results are largely flat on the top line versus last year, but a lot of that has been driven by the AUX acquisition. If we were to exclude the scope impact, could you give an indication of the underlying pricing volumes in the envelope business? Also, one quick question on the Malarkey expansion. You were saying that it's a 50% expansion for the site, but could you also specify how much it would mean for your overall residential roofing capacity?

Jan Jenisch (CEO and Chairman)

Ian, do you want to maybe address the organic versus the total sales number, and I could talk about that market a bit?

Ian Johnston (CFO)

In the quarter, our organic growth on revenue was down about 3% on our building envelope segment, and we were basically flat on organic growth on absolute growth.

Jan Jenisch (CEO and Chairman)

We are now, in overall, Q2 started a little slower due to adverse weather conditions. As weather conditions improved, data in Q2, we saw a need for rebound in volumes in late May and in June, especially after commercial roofing applications, where we finished in volumes ahead of last year. We are very excited now to start with the new fourth plant next year. That gives us enormous momentum here to really improve and expand market shares in very attractive markets. We are only present today by deliveries and not by local manufacturing.

Operator (participant)

Our next question comes from Will Jones with Redburn Atlantic. Please go ahead.

Will Jones (Analyst)

Morning. Could I ask, please, about the standalone costs relative to your prior expectation and just understanding the different numbers? I think for last year, there's a $115 million figure for the carve-out. I think in Q2, the run rate was about $40 million. Should we take that $40 million times four? Is that the new standalone, I guess, as we think on an annualized basis going forward or not? If it's more than you thought before, why? Is there anything you can do with time to drive that or the central costs lower? Thank you.

Ian Johnston (CFO)

Sure. I'll take that question. I think maybe I start at the tail end of your question. Absolutely, we will be continuing to refine those forecasts as we go forward. We think this is at the high end of the guidance that we would be issuing in terms of corporate costs. We provided some feedback in pro forma statements in 2024 and Q1 2025. The second quarter, $42 million is a little bit high. We would expect that that could phase out a little bit in the following quarters to come. The $115 million that we guide is for the full year and included in our overall guidance.

Will Jones (Analyst)

Thank you.

Operator (participant)

Our next question comes from Marcus Cole with UBS. Please go ahead.

Marcus Cole (Analyst)

Hi. I have one question as well. On cement, your price was only marginally up in the quarter. Is there anything that you can tell us in terms of some mix impacts going on there, some regional trends that we need to be aware of? On an underlying basis, was it high? Looking at the peer set, cement pricing was a little bit high from some of your peers. Any color you can give on mix or regional trends or an underlying basis would be helpful. Thank you.

Jan Jenisch (CEO and Chairman)

Yeah, no, thank you. I think we believe in North America. We have the strongest pricing for cement, the highest pricing. Also, we made some gains this year, even though it was difficult in a challenging market. You see our volumes were down 6% in Q2, and the market is soft. We were focusing very much on value for the customers. We didn't have any volume strategy. We believe the pricing will come back or will improve further if the volumes are coming back also in the quarter and years to come as we have expected strong rebound in volumes. On this side, we have, on the other side, we are very happy with our aggregate pricing, which was over 6% in North America on average. Very strong here.

The market conditions in our local markets were slightly better than for the cement markets as we were supplying a couple of infrastructure projects with higher demand. We could also here continue our very positive pricing here in the aggregate side.

Operator (participant)

Our next question comes from Jonathan Bettenhausen with Truist. Please go ahead.

Jonathan Bettenhausen (Analyst)

Hey, guys. Thanks for my question. I wanted to repeat these this morning. On the building envelope business, was reroofing activity, was that positive for both commercial and resi? Also, how did your total shingle shipments compare to the ARMA numbers this quarter? Thanks.

Jan Jenisch (CEO and Chairman)

Compared to what numbers? The shingle volumes?

Jonathan Bettenhausen (Analyst)

Yeah, the shingle shipments, how did that compare to the industry shipment numbers?

Jan Jenisch (CEO and Chairman)

Okay. All right. You know, we see, first of all, in the building envelope, we are very excited. I mean, we have talked a bit about the factors now influencing the demand in quarter two. We're buying interest rates, some weather effects. We saw a bit of softness. However, we are seeing positive momentum in commercial roofing markets. Our volumes were roughly flat through May, while our elevated volumes outpaced the market, and we were up low single digits in quarter two. For commercial new construction, it's mixed with pockets of strength. We talked about data center construction and stabilizing plants and warehousing. While in repair and refurbishment, it continues to be a bright spot and driving growth within our commercial roofing market. The shingle production was in line with ARMA.

Here, we have a continued residential repair and refurbishment market impacted by weather-related events and a little bit light by hail season so far this year, but we are very positive also here for the second half of the year.

Jonathan Bettenhausen (Analyst)

Awesome. That's helpful, Ian. Thanks.

Operator (participant)

Our next question comes from Yassine Touheri from On Field Research. Please go ahead.

Yassine Touheri (Analyst)

Good morning, and thank you very much for taking my question. It would be a question on capital allocation. How do you think about the group midterm? When will you decide about a dividend payout policy and shove it back? I'm not sure, maybe after a Board meeting. When you're talking about the $200 billion addressable markets, what is it composed of? Does it include insulated panel, wall system, all the liquid applied roofing, adhesives? It would be great to get a little bit of color on what this addressable market is to get a sense of where the building envelope division could go in the next decade.

Jan Jenisch (CEO and Chairman)

Oh, thank you. Great. Let me answer the question first on the markets, and then I think, Ian, you can give us more color on the capital allocation. The addressable market, the $200 billion, this is the available market for our products and technologies, which we own, and where we can expand our footprint. We know our market shares. We are the leader in cement, while we are a strong, I would say, follower in aggregates, where we and then we have a strong position in commercial roofing, while in shingles, we are having a huge growth path ahead of us compared with our low single-digit market share. The market is the $200 billion, doesn't require new technologies and new products. This is really what we can deliver to our customers today.

This will include opportunities for bolt-on acquisitions, other acquisitions, but here we are very, very confident that this market is available and addressable for us. For the capital allocation, before Ian talks a bit more details for us, we are, first of all, driving what is within our control. Cash generation and profitable growth is our number one focus at Amrize. Generate the cash to be allocated. Ian, if you can talk a bit about how our priorities are and what the next Board decisions are or the next steps are.

Ian Johnston (CFO)

Thanks, Jan. Thanks, Ian, for your question. We just had our first Board meeting earlier this week, and of course, the focus remains very aligned with what we shared with investors at our capital markets day back in March. Priorities for the business remain investing in capital first and foremost. That's going to continue to be an area where we have significant organic opportunities to invest and grow our business. Secondly, would be on M&A. We actually closed a deal this quarter and have lots in the pipeline to pursue. That will continue to be an area of priority. With regards to return of capital to shareholders, we obviously have to engage with our Board and get it aligned. The starting point will be a discussion on what the dividend could look like. We've indicated that that would be most probably U.S.

market specific, and we will need to ensure that we have alignment with the Board and bring that to shareholders in the beginning part of 2026. That's when we would be able to start issuing a dividend and possible return to shareholders in the form of share buyback would come at a later date as we align with our shareholders and our.

Yassine Touheri (Analyst)

If there is an amazing opportunity, a large strategic acquisition, would you consider issuing equity if it creates value for a shareholder?

Jan Jenisch (CEO and Chairman)

Equity is the last resort. It's expensive. In the past, we have been always very mindful to rather reduce the share count with share buybacks. To generate new equity is the last on my list.

Yassine Touheri (Analyst)

Thank you very much.

Operator (participant)

Our next question comes from Jon Bell with Deutsche Bank. Please go ahead.

Jon Bell (Analyst)

Yeah, good morning, Jan, Ian, and Scott. A question for me is on the Quikrete Summit deal. Any changes to industry dynamics that you want to flag? Has this impacted you in any way? Thank you.

Jan Jenisch (CEO and Chairman)

Thanks, Jan. Yeah, that's an interesting question. I'm not sure if I'm competent to answer your question, but obviously, I think what I always see in the industry is you see consolidation. This is another, if you want to say, consolidation where one player took over Summit and then they made some equity or some asset swaps and so on. I think in principle, it's probably good for the industry structure or something. Other than that, we have to wait and see how this will play out in the markets.

Jon Bell (Analyst)

Okay, thank you.

Operator (participant)

Our next question comes from Walter Bamert from Zürcher Kantonalbank.

Walter Bamert (Analyst)

Hello, everybody. Thank you for taking the question. You can hear me, don't you?

Jan Jenisch (CEO and Chairman)

Yes, we can hear you. Please go ahead.

Walter Bamert (Analyst)

Perfect. I think we've seen an upward share price reaction because you probably didn't reiterate the 2028 targets. Can you confirm that you are still sticking to those and confirming those?

Jan Jenisch (CEO and Chairman)

Yeah. Look, I think I talked briefly about it in the outlook. You know, at the moment, we have softer demand than expected. However, we see demand coming up with those inflection points of potentially lower interest rates and also a stabilized environment. It is difficult for us now to forecast when exactly this will happen. That's not in our control. However, we expect our markets will accelerate, and we are preparing for this. I think we are well-positioned for our long-term growth targets, and we are confident to confirm our midterm targets, our midterm guidance, which we gave in March at our Investor Day.

Walter Bamert (Analyst)

You would say 5%-8% top line growth on average, but not using it as a guidance for the current year?

Jan Jenisch (CEO and Chairman)

No, I mean, I think everyone sees the current year, the market, the demand. It's just in a different ballpark. We have to focus on what is under our control at Amrize. We're focusing on the pricing. We're focusing on delivering all the CapEx project opportunities. We are working on our M&A pipeline. We are preparing. We now will increase our efficiency with the Aspire program. We are working very hard to make our company ready for growth, but at the same time, we're expanding our margins. When the markets will start to improve, this is what we expect. We are ready, and I think the midterm guidance is an excellent midterm target for us.

Walter Bamert (Analyst)

Okay. As I'm limited to one question, the second half of the question is, can you quantify the cost of the Aspire program?

Jan Jenisch (CEO and Chairman)

Oh, that's a good question. We have, I mean, our cost, we do that with our own people, right? We have a strong program. We change, we adapt the organization a bit. We have some great leader who actually came over from the building envelope side and now takes over the whole supply or has taken over the whole supply chain for Amrize. This is the base move. He has a very, very strong program now to deliver, but with the people in our operations. We don't have extra costs to do this.

Walter Bamert (Analyst)

That's good to hear. Thank you very much.

Operator (participant)

We have no further questions at this time. I will turn the call back over to Scott Einberger, Investor Relations Officer, for closing remarks.

Scott Einberger (Investor Relations Officer)

Thank you all for joining us for our Second Quarter Earnings Call. We look forward to speaking with you all next quarter.