TRG | The Bottom Line – 1/9

TRG is in the thick of our Q4’25 “survey season,” publishing our “Q4’25 Contractor & Surety Survey”, “Q4’25 Heavy Materials & Infrastructure Survey” and "Q4'25 Equipment Rental Survey" this week. Although 2025 is in the rearview mirror, a few similar themes remain intact as we head into 2026.  A few pithy TRG predictions from our survey work this week:

• Prediction #1 – The construction phase of reindustrialization is happening before our very eyes. To put a finer point on the thesis, we are in the construction phase of this secular shift. America cannot reindustrialize without building.

• Prediction #2 – 2026 will be another strong year for M&A in the heavy materials space.

• Prediction #3 – International turmoil will only increase in 2026, forcing investors to seek U.S. revenue focused companies. The more U.S.-revenue based, the better from an investor perspective.

TRG’s contractor and surety contacts re-iterated 2026 is still “pedal to the metal” on large/megaprojects, while local markets are stuck in neutral. This nets out to non-res still being in the low/no growth part of the cycle, but companies with meaningful exposure to megaprojects are still growing nicely. Sureties and contractors are seeing strength in roads, water/wastewater, data centers, power, and manufacturing, all positive for heavy materials demand. We believe this is reflective of our long-term thesis that we are in the construction phase of the reshoring of manufacturing activity to the U.S. Moreover, we expect to see continued steady growth in energy and water infrastructure projects, all supportive of this broad reindustrialization thesis. Next week we will gain additional insights into the residential end market with the publication of our “Q4’25 Residential & Non-res Product Survey.” Residential sentiment going into 2026 is certainly more muted that last year at the same time. Expectations are so low that even “less bad” could equate to a big boost in resi-focused stocks.