TRG | The Bottom Line – 8/6

With Q2’21 earnings season very nearly wrapped up, companies have been reporting how each are managing strong demand, acute supply chain constraints and rampant inflation. M&A has remained a distinct theme in 2021, and as we look at the back half of 2021, additional pricing actions have been implemented, from cement to carpet tiles. Going into Q2’21 earnings season, TRG was focused on feedback from the field highlighted a robust recovery in a previously beleaguered end market – commercial/non-res. Q2’21 earnings season proved that non-res certainly is recovering, and it’s not all just talk. Commercial-flooring focused Interface (TILE) in its earnings call this past week reported a 38% YOY increase in orders, while Beacon Building Products (BECN) reported a 16% increase in non-res end market sales on a per day basis. Heavy materials producers Martin Marietta Materials (MLM), Summit Materials (SUM) and Vulcan Materials (VMC) this past week also cited a recovery in non-res end market, noting an increase in demand for light commercial work (i.e., education, grocery stores, etc.). With all key construction end markets on the mend – residential, non-res and public – we expect that pricing actions being implemented in 2H’21 will largely be successful.