Vulcan Benefits From Infrastructure Spending, but Residential Construction Demand Remains Tepid

Aggregates producer Vulcan Materials is positioned well to benefit from the ongoing recovery of US construction spending. We forecast strengthening demand growth for the public sector and modest growth for the private sector. Accounting for roughly 40% of shipments, public-sector demand is generally more stable, and projects, primarily highway construction, are more aggregate-intensive per dollar of spending. Federal funding power has weakened as better vehicle mileage and inflation have diminished the buying power of the $0.18 per gallon gasoline tax, unchanged since 1993. The FAST Act, passed in December 2015, provided stability and near-term funding certainty but didn't solve the still-weakening gas tax. However, long-term federal funding was passed in late 2021, totaling $1.2 trillion.