Grade: F — Major Red Flags
Framework: Schilit *Financial Shenanigans* + Beneish M-Score + forensic accounting principles
Data: SEC EDGAR 10-K (Filed 2026-02-18, FY ended December 31, 2025) + Yahoo Finance
Auditor: Deloitte & Touche LLP — Unqualified opinion (critical audit matters: acquisition valuations)
One-line verdict: CRH is a serial acquirer spending $4.1 billion on 38 acquisitions in 2025 alone, with goodwill plus intangibles now at 63% of equity, cash covering only 21% of $19.7 billion total debt, and AR outpacing revenue for two consecutive years. The underlying operations are healthy — operating cash flow of $5.6 billion at 148% of net income, steady margin expansion, and an M-Score of -2.52 — but the aggressive acquisition pace creates a balance sheet loaded with acquisition-driven goodwill ($13.1B) and financed by $17.7B in long-term debt. This is a well-run company building a fragile balance sheet through sustained M&A activity.
| Metric | Result |
|---|---|
| Red Flags | **3** (AR trend, cash-to-debt, goodwill/equity) |
| Watch Items | **2** (soft asset growth, FCF after acquisitions) |
| Checks Completed | **18/18** |
| Beneish M-Score | **-2.52** (clean) |
| Z-Score | **3.58** (safe zone) |
| Auditor | Deloitte & Touche LLP — serving since 2025 (new auditor) |
A Building Materials Conglomerate Powered by Acquisitions
Per the filing, CRH generated "Total revenues, $3.8 billion of Net income and $7.7 billion of Adjusted EBITDA." The company reports through two divisions and three segments:
| Division / Segment | Description |
|---|---|
| Americas Materials Solutions | Cement, aggregates, readymixed concrete, asphalt |
| Americas Building Solutions | Precast, architectural products, infrastructure products |
| International | Building materials across Europe, Asia, and other markets |
Per the filing: "In 2025, 40% of Total revenues came from infrastructure, 32% from residential construction and 28% from non-residential construction." North America generated 71% of net income and 71% of Adjusted EBITDA.
The largest 2025 acquisition was Eco Material Technologies, "North America's leading supplier of Supplementary Cementitious Materials (SCMs)."
Profitability: Steadily Expanding
| Metric | FY2023 | FY2024 | FY2025 | Trend |
|---|---|---|---|---|
| Revenue | $34,949M | $35,572M | $37,447M | +7.2% over 3 years |
| Net Income | $3,154M | $3,458M | $3,730M | +18.3% over 3 years |
| Gross Margin | 34.2% | 35.7% | 36.1% | Rising 3 consecutive years |
| Net Margin | 9.0% | 9.9% | 10.1% | Expanding |
| EBITDA Margin | — | 19.5% | 20.5% | +100 bps |
Per the filing: "Net income margin was 10.1% in 2025 and 9.9% in 2024. Adjusted EBITDA margin was 20.5% in 2025, an increase of 100 basis points compared with an Adjusted EBITDA margin of 19.5% in 2024."
Cash Flow: Strong but Acquisition-Consumed
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Operating Cash Flow | $5,017M | $4,989M | $5,625M |
| Net Income | $3,154M | $3,458M | $3,730M |
| CFFO / NI | 1.59 | 1.44 | 1.51 |
| CapEx | $1,817M | $2,578M | $2,713M |
| Free Cash Flow | $3,200M | $2,411M | $2,912M |
Per the filing: "Operating cash flow and Net cash provided by operating activities as a percentage of Net income of $5.6 billion and 148% were ahead of 2024 levels of $5.0 billion and 142%."
However, CRH spent $4.1 billion on acquisitions in 2025 and $5.0 billion in 2024. After acquisitions, FCF has been negative in 2 of the last 3 years. The company is generating healthy organic cash flow but channeling it into M&A, supplemented by debt.
Share-based compensation was $143 million in 2025, up from $125M in 2024. CRH repurchased 11.7 million shares for $1.2 billion in 2025 and paid $1.0 billion in dividends.
The 18-Point Screening
Revenue Quality
| # | Check | Result | Detail |
|---|---|---|---|
| A1 | DSO Change | ✅ | DSO 42 days, +3 days YoY |
| A2 | AR vs Revenue Growth | ❌ | AR outpaced revenue for 2 consecutive years |
| A3 | Revenue vs CFFO | ✅ | Revenue +5.3%, CFFO +12.7% |
A2 — AR growth exceeding revenue. Accounts receivable increased to $5,178M from $4,820M (+7.4%) while revenue grew 5.3%. The two-year pattern could reflect acquisition-driven receivables integration or looser collection terms in new markets. With 38 acquisitions in a single year, newly consolidated businesses bring their own receivable dynamics.
Expense Quality
| # | Check | Result | Detail |
|---|---|---|---|
| B1 | Inventory vs COGS | ✅ | Inventory +10.4% vs COGS +4.6% |
| B2 | CapEx vs Revenue | ✅ | CapEx +5.2% vs revenue +5.3% |
| B3 | SG&A Ratio | ✅ | SG&A/Gross Profit = 59.2%. Normal for materials |
| B4 | Gross Margin | ✅ | 36.1%, +0.4pp. Stable |
Cash Flow Quality
| # | Check | Result | Detail |
|---|---|---|---|
| C1 | CFFO vs Net Income | ✅ | CFFO/NI = 1.51 |
| C2 | Free Cash Flow | ✅ | FCF $2.9B, FCF/NI = 0.78 |
| C3 | Accruals Ratio | ✅ | -3.2%. Low |
| C4 | Cash vs Debt | ❌ | Cash $4.1B covers only 21% of debt $19.7B |
C4 — Heavy debt load. The balance sheet shows long-term debt of $17,653M plus finance leases of $534M. Cash of $4,096M covers only 21% of total debt. Per the filing, the debt load grew from $11.6B (2023) to $15.6B (2024) to $19.7B (2025) — nearly doubling in two years, almost entirely to fund acquisitions.
Balance Sheet
| # | Check | Result | Detail |
|---|---|---|---|
| D1 | Goodwill + Intangibles | ❌ | $15.1B = 63% of equity |
| D2 | Leverage | ✅ | Debt/EBITDA = 2.5x |
| D3 | Soft Asset Growth | ⚠️ | Other assets grew 28.1% vs revenue 5.3% |
| D4 | Asset Impairment | ✅ | Write-offs normal |
D1 — Goodwill accumulation. Goodwill rose from $11,061M to $13,099M in a single year — a $2.0B increase driven by the 38 acquisitions. Total intangibles jumped from $1,211M to $2,048M. CRH has 26 reporting units for goodwill testing. The critical audit matter identified by Deloitte specifically addresses "Acquisitions - Valuation of contract-based Intangible assets," noting the complexity of fair value allocation across so many transactions.
D3 — Other noncurrent asset growth. Other noncurrent assets rose from $795M to $1,018M (+28.1%), well above revenue growth. This warrants monitoring for acquisition-related deferred charges or earn-out obligations.
Acquisition Risk
| # | Check | Result | Detail |
|---|---|---|---|
| E1 | Serial Acquirer FCF | ⚠️ | FCF after acquisitions negative for 2/3 years |
| E2 | Goodwill Surge | ✅ | Goodwill change +23% YoY |
E1 — Acquisition spending exceeds FCF. With $4.1B in 2025 and $5.0B in 2024 spent on acquisitions against FCF of $2.9B and $2.4B respectively, CRH is financing growth through debt. This is a deliberate strategy, but it creates integration and debt-servicing risk.
Manipulation Score
| # | Check | Result | Detail |
|---|---|---|---|
| F1 | Beneish M-Score | ✅ | -2.52 (clean) |
Key Risks from the 10-K
1. New Auditor — Deloitte Replaced the Prior Firm in 2025
Per the filing: "We have served as the Company's auditor since 2025." Auditor changes at companies of CRH's scale deserve attention. CRH moved its primary listing to the NYSE and changed auditors in connection with its U.S. redomiciling strategy.
2. Acquisition Integration Risk at Scale
38 acquisitions in one year requires enormous integration capacity. The filing warns that acquisitions can lead to "write-downs, impairment charges or unforeseen liabilities that could negatively affect its operating results or financial position." With $13.1B goodwill across 26 reporting units, impairment risk is distributed but omnipresent.
3. Construction Cycle Exposure
60% of revenues come from new-build construction. Per the filing, government infrastructure spending supports demand, but residential and non-residential construction are cyclically sensitive. Any sustained downturn in construction activity would pressure revenues across all three segments simultaneously.
4. Irish Dividend Withholding Tax Complexity
As an Irish-domiciled company listed on the NYSE, CRH subjects U.S. shareholders to Irish Dividend Withholding Tax (DWT) unless they file appropriate exemption forms. The filing notes shareholders "must provide the appropriate Irish DWT form to our Transfer Agent" before each record date.
Summary
Grade: F. Aggressive serial acquisition strategy has doubled debt in two years while accumulating $15B in goodwill and intangibles — despite fundamentally healthy underlying operations.
CRH's operating performance is strong: margins are expanding, cash conversion is 148% of net income, and the M-Score is clean at -2.52. But the company spent $9.1 billion on 78 acquisitions across 2024-2025, financing the spree with debt that grew from $13.0B to $19.7B. Goodwill at $13.1B (63% of equity), cash covering only 21% of debt, and AR outpacing revenue for two consecutive years create three red flags that the engine rightly penalizes. The new auditor identified acquisition valuations as a critical audit matter. CRH is not manipulating its books — it is building an acquisition-driven empire on a leveraged balance sheet.
**Disclaimer**: This report is based on CRH plc's FY2025 10-K filed with SEC EDGAR on February 18, 2026. This is NOT investment advice.
Data: SEC EDGAR 10-K + Yahoo Finance
Auditor: Deloitte & Touche LLP (Unqualified opinion, critical audit matter — acquisition valuations)
Fiscal year ended: December 31, 2025