Strategic Performance and Portfolio Evolution
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Achieved record first-quarter revenues of $1.4 billion, driven by organic aggregate shipment growth of 7.2% that significantly exceeded internal guidance.
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Performance was bolstered by an early construction season start in the Midwest and Colorado, alongside sustained demand for infrastructure and heavy nonresidential projects.
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Completed the Quikrete Asset Exchange, the largest aggregates acquisition in company history, which strategically shifts the portfolio away from cyclical cement and concrete toward durable aggregates.
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Reported that the Quikrete integration is ahead of schedule, with initial results exceeding EBITDA and margin expectations while providing $450 million in cash for further redeployment.
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Attributed a slight decline in reported aggregates gross profit to geographic mix, as high-volume growth in the Central and West divisions offset higher-margin contributions from the East and Southwest.
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Maintained operational discipline through the strongest first-quarter safety performance in company history, reinforcing the 'one culture' framework during leadership transitions.
2026 Outlook and Strategic Assumptions
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Reaffirmed full-year 2026 adjusted EBITDA guidance of $2.43 billion at the midpoint, excluding contributions from the pending New Frontier Materials acquisition.
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Anticipates shipments will trend toward the higher end of the annual guide based on strong April demand and a robust pipeline of heavy nonresidential projects.
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Expects a higher realization of midyear price increases compared to the prior year to offset inflationary pressures, particularly rising diesel costs.
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Assumes infrastructure demand remains stable despite potential legislative delays, as state DOTs maintain multiyear visibility and high spending authority.
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Projects $50 million in synergies from the Quikrete transaction over the coming years as unit profitability is normalized across the new assets.
Structural Changes and Risk Factors
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Entered a definitive agreement to acquire New Frontier Materials, adding 8 million tons of annual aggregate capacity along the strategic I-70 corridor.
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Recognized a noncash $22 million charge in the first quarter related to the fair market value step-up of Quikrete inventory, with $44 million remaining to be processed in Q2.
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Identified a $36 million headwind for the aggregates business ($50 million total company) due to diesel price volatility, primarily weighted toward the second quarter.
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Noted that affordability pressures from high interest rates continue to suppress activity in the light nonresidential and residential construction sectors.
Q&A Session Highlights
Impact of diesel inflation and midyear pricing strategy
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Management expects to consume approximately 55 million gallons of diesel this year, with price peaks anticipated in Q2 before moderating.
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Confidence in the full-year guide is supported by the expectation that midyear price increases will be more broad-based and see higher realization than the historical 25% average.
Surface transportation reauthorization and federal funding visibility
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Management does not expect a short-term continuing resolution (CR) to disrupt 2026 activity, as federal highway funds would continue flowing at currently high levels.
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Noted that nearly half of the funding from the current IIJA remains undistributed, providing a significant multiyear tailwind for core infrastructure projects.
M&A pipeline and geographic expansion strategy
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The pipeline remains active with a focus on pure-play aggregates; management has identified 300 million tons of annual capacity in 'SOAR-aligned' markets for potential acquisition.
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Future deals will likely feel like 'bolt-ons' geographically but may have the financial scale of platform transactions, reducing the risk of entering unfamiliar territories.
Nonresidential demand drivers beyond traditional warehousing
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Heavy nonresidential growth is increasingly diversified, with data center volumes up 62% and warehousing up 57% in the quarter.
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Significant momentum is building in projects along the Gulf Coast, with a pipeline of LNG and other potential projects estimated to require over 33 million tons of aggregates.
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