Bill Sandbrook, the chairman, president and CEO of mass concrete and aggregates producer U.S. Concrete, told CNBC that the 2018 midterm elections gave him “optimism” that a major infrastructure bill could get passed in the near future.
Despite public construction numbers as a percentage of gross domestic product — an important metric for industrials like U.S. Concrete — being historically low, “states are taking things into their own hands” when it comes to construction, the CEO said on “Mad Money.”
Not only have 29 states raised their gas taxes since 2013 to fund infrastructure projects, but public builders logged some additional wins in this year’s midterms. Sandbrook said SB-1, California’s gas tax, survived, and Proposition 6, a plan to cut some infrastructure funding, was voted down.
“Where people actually get to vote for higher taxes, if they have a direct line of sight to the use for improved infrastructure, they support that,” Sandbrook told CNBC’s Jim Cramer.
“[That] still gives me optimism that the next Congress may be even a little bit more friendly to spending money, with a Democratic House, [and] that we will have something in the next two years,” the CEO continued.
Shares of the weather-dependent U.S. Concrete have been under pressure this year as Texas, one of its key markets, saw some of the rainiest months in the state’s history.
The manufacturer acquired aggregate maker Polaris Industries — whose complementary product lines aren’t as tied to weather conditions — in 2017 to counteract the weakness. The move away from concrete will continue, Sandbrook said.
And the construction colossus, which has made strategic acquisitions over the years to cement its place as one of the few companies that can handle large-scale projects in dense urban areas, has a positive outlook on 2019.
Sandbrook told Cramer that U.S. Concrete has 70 projects on its backlog for next year commissioned by the likes of Alphabet’s Google, Nvidia and Facebook. All 70 projects are larger than 20,000 yards, or roughly 11.3 miles. Also on the horizon are a tunnel under New York’s Hudson River, a gateway project linking Newark Airport and New York City, a new terminal at Newark and upgrades at John F. Kennedy Airport, all of which are pending public funding.
Shares of U.S. Concrete soared despite broader market weakness on Thursday, settling up 5.07 percent at $38.11.
Disclosure: Cramer’s charitable trust owns shares of Alphabet and Facebook.
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