Bldg Materials Update: IIJA's Proposed Successor Thinks Small

Research evidence excerpt

Bldg Materials Update: IIJA's Proposed Successor Thinks Small

Equity Research

Industry Update — May 18, 2026

Construction Materials

Bldg Materials Update: IIJA's Proposed

Successor Thinks Small

Our Call Timna Tanners

An initial surface transportation draft pointed to modest growth, with no guarantee it Equity Analyst | Wells Fargo Securities, LLC

Timna.Tanners@wellsfargo.com | 212-214-5437

passes before IIJA's Sept 30 expiry. On the positive side, remaining IIJA funds can still pad

Matt Dushkin, CPAspending and progress was encouraging. We stay selective the group.

Associate Equity Analyst | Wells Fargo Securities, LLC

Matt.B.Dushkin@wellsfargo.com | 713-320-7199

IIJA replacement doesn't offset inflation. The House Monday released its first surface

transportation reauthorization draft, the five-year $580B BUILD America 250 Act,

Exhibit 1 - Highway and street PPI (y/y)maintaining core highway funding with muted growth and shifting toward formula

programs. The ~3% y/y increase in year-one road spending lagged construction inflation,

in our view. The bill in this form looks neutral-to-cautious for names most exposed to

government road spending, particularly KNF, MLM, VMC and CRH.

Continuing reauthorization most likely scenario. The long-awaited proposal was a

needed first step, but history suggests a continuing resolution is the best base case

(Exhibit 2). Timing for reauthorization this year is tricky with legislators likely distracted

by midterm elections. Positively, only 52% of IIJA highway funds had been outlaid as of

February, providing some runway, yet inflation likely erodes purchasing power on the

Source: FRED, Wells Fargo Securities, LLCremaining dollars, especially with construction PPI on the rise.