The Bottom Line 8-16

TRG | Overview of Q2 Results & Mid-Year Takeaways – Key drivers of Q2 results: Overall, inflation was less of an issue in Q2’19, with most companies benefitting from 2018 pricing actions and falling energy costs. Public and non-res end market prospects remain bright, with public building greater relative momentum. Resi R&R continues to outperform new residential construction.

  • Resi Products companies (DOOR, FBHS, JELD, MAS): Showed strong pricing (much of which was implemented in the second half of 2018), even in an environment of slower volumes.

  • Building Products (AWI, BECN, CBPX, FBM, GMS, OC, MHK, TILE): Commercial construction trends remain robust, outperforming new residential construction. Companies by in large reported earnings beats, fueled by strong pricing (carry over from aggressive pricing actions in 2018 to overcome inflation headwinds), lower costs (mostly energy and energy-related products) and better utilization.

  • Heavy Materials (EXP, MLM, SUM, VMC): All companies reported increases in volumes and pricing driven by public and non-res end markets. Moreover, companies remained optimistic that backlogs for non-res are strong and out into 2020, while public markets are seeing more large multi-stage projects setting the stage for continued growth despite concerns of the cycle.

  • Non-res / Equipment Rental (URI, HRI, HEES, GVA): Strong end markets support solid rates, and companies remain disciplined in fleet expansion. Furthermore, companies remain disciplined in their leverage profile.

Leisa Childers