TRG | The Bottom Line – 4/4

TRG published its Q1’25 Heavy Materials & Infrastructure Survey this week, focusing on key aggregate, concrete, asphalt and cement volume and pricing trends throughout Q1’25. All eyes have been focused on the April 2nd “Independence Day,” and macro uncertainty leading into the announcement and directly after has pounded both sentiment and stocks. TRG two years ago put a stake in the ground that the U.S. was entering into a construction “Golden Era.” Our survey from a year ago focused on the theme of reindustrialization of the U.S. This theme has broad implications, hitting all key end markets – public, non-res and residential. What hasn’t changed, in our opinion, is the trend of a greater push for investments in the U.S. industrial machine. Despite the uncertainty, TRG industry contacts in our Q1’25 Heavy Materials & Infrastructure Survey continue to point to very solid visibility with the public/infrastructure end market (despite noise around a NC bridge cancellation…keep in mind that state has $5B of storm damage to address to roads & bridges, so there will be years of construction in clean-up efforts). TRG core state lettings show a 23% YTD increase in lettings (with a whopping 43% YOY increase in February alone). Non-res demand continues to be dominated by large-scale projects – data centers, energy dominating the discussion. We are even hearing green shoots from laggards such as distribution. Overall, mega project growth (and visibility) overshadows relative weakness in light commercial construction projects. Finally, residential end market can best be described as jumping off a pancake…not much upside or downside given the current rate and relative market uncertainty. We think you will hear a mixed bag from heavy materials companies reporting earnings this season on volume trends, with a range from down 1-2% to up 1-2%. What remains unchanged is our view on pricing, up MSD to HSD. A combination of continued consolidation in the market, along with longer-term visibility helps to support this pricing structure.