Q226E Building Mats Preview: Margin Squeeze, Challenged Govt Spending

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Q226E Building Mats Preview: Margin Squeeze, Challenged Govt Spending

Equity Research

Earnings Preview — July 8, 2026

Construction Materials

Q226E Building Mats Preview: Margin

Squeeze, Challenged Govt Spending

Our Call Timna Tanners

We see Q2E pressured by higher energy costs, as pricing actions lag cost inflation. In Equity Analyst | Wells Fargo Securities, LLC

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

addition, better evidence of leaner govt spending ahead keeps us broadly cautious. CRH is

Matt Dushkin, CPAour new top pick, with its ACA deal and valuation screening attractive.

Associate Equity Analyst | Wells Fargo Securities, LLC

matt.dushkin@wellsfargo.com | 713-320-7199

Q2 cost pinch, H2E expansion? We expect light Q2s, particularly for aggregates names

MLM and VMC, as higher diesel costs pressure margins and offsetting price increases do Exhibit 1 - Building materials coverage

not take effect until H2E. Yet a recent sharp decline in diesel prices could set up margin rating and price target changes

expansion in H2E as some price hikes kick in. Persistent wet weather, especially in Texas Ticker Rating Old PT New PT Change

and the SE, can weigh on Q2E volumes, pressuring fixed-cost absorption. Soft residential AMRZ OW $65 $58 -10.8%

CRH OW $135 $132 -2.2%

trends remain a headwind particularly for EXP and AMRZ. EXP OW $246 $240 -2.4%

KNF UW $80 $81 1.3%

Guidance likely maintained. While we expect most mgmts to reiterate full-year MLM EW $614 $616 0.3%

guidance despite higher costs, we see the most risk for AMRZ given Building Envelope VMC EW $310 $305 -1.6%

headwinds. Aggregate pricing trends appeared strong in May, while -0.6% PPI in May Source: Wells Fargo Securities, LLC estimates

suggested more pressure on cement.