[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents unaudited condensed consolidated financial statements and detailed notes for Granite Construction Incorporated [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Presents unaudited condensed consolidated financial statements and accompanying notes for Granite Construction Incorporated [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2019 (in thousands) | December 31, 2018 (in thousands) | June 30, 2018 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | **ASSETS** | | | | | Total current assets | $1,402,608 | $1,415,389 | $1,371,028 | | Total assets | $2,558,141 | $2,476,601 | $2,556,325 | | **LIABILITIES AND EQUITY** | | | | | Total current liabilities | $809,861 | $677,842 | $897,690 | | Total liabilities and equity | $2,558,141 | $2,476,601 | $2,556,325 | | Total Granite Construction Incorporated shareholders' equity | $1,207,408 | $1,351,633 | $1,255,576 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :--------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Total revenue | $789,540 | $807,119 | $1,409,341 | $1,370,498 | | Gross (loss) profit | $(52,404) | $80,369 | $(11,926) | $136,652 | | Operating loss | $(126,644) | $(5,729) | $(168,744) | $(18,564) | | Net loss attributable to Granite Construction Incorporated | $(97,836) | $(8,385) | $(132,410) | $(19,808) | | Basic Net loss per share | $(2.09) | $(0.20) | $(2.83) | $(0.49) | | Diluted Net loss per share | $(2.09) | $(0.20) | $(2.83) | $(0.49) | [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) | Metric | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :------------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net loss | $(93,961) | $(6,081) | $(125,042) | $(15,743) | | Other comprehensive (loss) income | $(2,822) | $(173) | $(2,699) | $390 | | Comprehensive loss attributable to Granite Construction Incorporated | $(100,658) | $(8,558) | $(135,109) | $(19,418) | [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) | Metric | June 30, 2019 (in thousands) | December 31, 2018 (in thousands) | June 30, 2018 (in thousands) | | :--------------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | Common stock, $0.01 par value | $468 | $467 | $457 | | Additional paid-in capital | $568,264 | $564,559 | $516,680 | | Accumulated other comprehensive (loss) income | $(3,448) | $(749) | $1,022 | | Retained earnings | $642,124 | $787,356 | $737,417 | | Total Granite Construction Incorporated shareholders' equity | $1,207,408 | $1,351,633 | $1,255,576 | | Non-controlling interests | $50,160 | $46,001 | $45,410 | | Total equity | $1,257,568 | $1,397,634 | $1,300,986 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash used in operating activities | $(93,515) | $(75,445) | | Net cash used in investing activities | $(47,926) | $(38,480) | | Net cash provided by financing activities | $13,595 | $81,475 | | Net decrease in cash, cash equivalents and restricted cash | $(127,846) | $(32,450) | | Cash, cash equivalents and restricted cash at end of period | $150,783 | $201,261 | [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Basis of Presentation](index=11&type=section&id=Note%201.%20Basis%20of%20Presentation) - The condensed consolidated financial statements are unaudited and prepared in accordance with SEC rules and U.S. GAAP, with certain information condensed or omitted. Results for the three and six months ended June 30, 2019, are not indicative of the full year due to seasonal weather impacts[21](index=21&type=chunk)[22](index=22&type=chunk) - On May 22, 2019, Granite acquired certain assets and equipment of Lametti & Sons, Inc., a Minnesota-based company specializing in cured-in-place pipe rehabilitation and trenchless renewal, for **$6.2 million cash**[24](index=24&type=chunk) [Note 2. Recently Issued and Adopted Accounting Pronouncements](index=12&type=section&id=Note%202.%20Recently%20Issued%20and%20Adopted%20Accounting%20Pronouncements) - Granite adopted ASU 2018-02 (Income Statement - Reporting Comprehensive Income) in Q1 2019, electing not to reclassify immaterial stranded tax effects from AOCI to retained earnings, and will use an item-by-item approach for future tax effects[27](index=27&type=chunk) - Topic 842 (Leases) was adopted using a modified retrospective approach, resulting in a net cumulative decrease to retained earnings of approximately **$0.5 million** and the recognition of ROU assets, short-term, and long-term lease liabilities of **$72.2 million**, **$14.9 million**, and **$60.4 million**, respectively, as of January 1, 2019[28](index=28&type=chunk)[29](index=29&type=chunk) [Note 3. Acquisitions](index=13&type=section&id=Note%203.%20Acquisitions) - The acquisition of Layne Christensen Company on June 14, 2018, has finalized its purchase price accounting with no material measurement period adjustments during the three and six months ended June 30, 2019[35](index=35&type=chunk) Pro Forma Combined Results (Granite and Layne) | Metric | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :------------------------------------------ | :-------------------------------------------- | :------------------------------------------ | | Revenue | $909,783 | $1,583,073 | | Net income | $16,834 | $14,454 | | Net income attributable to Granite | $14,530 | $10,389 | | Basic net income per share | $0.32 | $0.23 | | Diluted net income per share | $0.30 | $0.22 | [Note 4. Revisions in Estimates](index=13&type=section&id=Note%204.%20Revisions%20in%20Estimates) - For the three and six months ended June 30, 2019, revisions in estimates, including cost recovery of customer affirmative claims and back charges, led to significant decreases in gross profit and net loss, primarily within the Transportation segment[41](index=41&type=chunk)[43](index=43&type=chunk) Impact of Revisions in Estimates on Project Profitability | Metric | Three Months Ended June 30, 2019 (in millions) | Three Months Ended June 30, 2018 (in millions) | Six Months Ended June 30, 2019 (in millions) | Six Months Ended June 30, 2018 (in millions) | | :------------------------------------ | :------------------------------------------- | :------------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Number of projects with downward estimate changes | 5 | 2 | 5 | 3 | | Decrease to project profitability | $161.1 | $30.2 | $167.8 | $38.0 | | Decrease in net loss per share | $2.57 | $0.57 | $2.68 | $0.73 | - The decreases in 2019 were attributed to increased project completion costs, schedule delays, disputed work, and an unfavorable court ruling, partially offset by increased estimated recovery from customer affirmative claims[43](index=43&type=chunk) [Note 5. Disaggregation of Revenue](index=14&type=section&id=Note%205.%20Disaggregation%20of%20Revenue) Disaggregated Revenue by Segment and Operating Group (Three Months Ended June 30, 2019) | Operating Group | Transportation (in thousands) | Water (in thousands) | Specialty (in thousands) | Materials (in thousands) | Total (in thousands) | | :---------------------- | :---------------------------- | :------------------- | :----------------------- | :----------------------- | :------------------- | | California | $138,411 | $2,634 | $42,980 | $50,962 | $234,987 | | Federal | $51 | $371 | $18,523 | — | $18,945 | | Heavy Civil | $77,009 | $3,381 | — | — | $80,390 | | Midwest | $28,135 | — | $39,582 | — | $67,717 | | Northwest | $160,372 | $1,349 | $48,676 | $40,846 | $251,243 | | Water and Mineral Services | — | $105,096 | $25,323 | $5,839 | $136,258 | | **Total** | **$403,978** | **$112,831** | **$175,084** | **$97,647** | **$789,540** | Disaggregated Revenue by Segment and Operating Group (Six Months Ended June 30, 2019) | Operating Group | Transportation (in thousands) | Water (in thousands) | Specialty (in thousands) | Materials (in thousands) | Total (in thousands) | | :---------------------- | :---------------------------- | :------------------- | :----------------------- | :----------------------- | :------------------- | | California | $207,924 | $4,000 | $75,137 | $74,027 | $361,088 | | Federal | $77 | $879 | $33,725 | — | $34,681 | | Heavy Civil | $271,980 | $7,915 | — | — | $279,895 | | Midwest | $46,196 | $84 | $75,470 | — | $121,750 | | Northwest | $216,011 | $2,580 | $80,868 | $55,378 | $354,837 | | Water and Mineral Services | — | $196,628 | $50,577 | $9,885 | $257,090 | | **Total** | **$742,188** | **$212,086** | **$315,777** | **$139,290** | **$1,409,341** | [Note 6. Unearned Revenue](index=15&type=section&id=Note%206.%20Unearned%20Revenue) Unearned Revenue by Segment and Operating Group (June 30, 2019) | Operating Group | Transportation (in thousands) | Water (in thousands) | Specialty (in thousands) | Total (in thousands) | | :---------------------- | :---------------------------- | :------------------- | :----------------------- | :------------------- | | California | $590,641 | $14,382 | $119,152 | $724,175 | | Northwest | $374,148 | $710 | $93,411 | $468,269 | | Heavy Civil | $1,751,819 | $12,146 | — | $1,763,965 | | Federal | $80 | $1,350 | $146,516 | $147,946 | | Midwest | $204,749 | $110 | $158,378 | $363,237 | | Water and Mineral Services | — | $224,720 | — | $224,720 | | **Total** | **$2,921,437** | **$253,418** | **$517,457** | **$3,692,312** | [Note 7. Contract Assets and Liabilities](index=16&type=section&id=Note%207.%20Contract%20Assets%20and%20Liabilities) - Granite recognized **$8.8 million** and **$105.6 million** in revenue during the three and six months ended June 30, 2019, respectively, from contract liabilities existing at December 31, 2018[47](index=47&type=chunk) - Changes in contract transaction price, including executed or estimated change orders and unresolved claims, resulted in **$43.5 million** and **$84.8 million** in recognized revenue for the three and six months ended June 30, 2019, respectively[48](index=48&type=chunk) Aggregate Claim Recovery Estimates Included in Contract Asset and Liability Balances | Date | Amount (in thousands) | | :----------- | :-------------------- | | June 30, 2019 | $58,700 | | December 31, 2018 | $45,100 | | June 30, 2018 | $36,100 | [Note 8. Receivables, net](index=16&type=section&id=Note%208.%20Receivables%2C%20net) Receivables, Net (in thousands) | Category | June 30, 2019 (in thousands) | December 31, 2018 (in thousands) | June 30, 2018 (in thousands) | | :-------------------------------- | :------------ | :---------------- | :------------ | | Billed contracts completed and in progress | $313,185 | $285,521 | $340,548 | | Unbilled contracts completed and in progress | $163,950 | $98,755 | $71,464 | | Material sales | $61,204 | $45,286 | $64,128 | | Other | $14,260 | $44,195 | $16,644 | | Total gross receivables | $552,599 | $473,757 | $492,784 | | Less: allowance for doubtful accounts | $641 | $511 | $66 | | **Total net receivables** | **$551,958** | **$473,246** | **$492,718** | [Note 9. Marketable Securities](index=17&type=section&id=Note%209.%20Marketable%20Securities) Held-to-Maturity Marketable Securities (in thousands) | Category | June 30, 2019 (in thousands) | December 31, 2018 (in thousands) | June 30, 2018 (in thousands) | | :-------------------------------- | :------------ | :---------------- | :------------ | | U.S. Government and agency obligations | $41,037 | $24,996 | $15,000 | | Corporate bonds | — | $5,006 | $5,014 | | **Total short-term marketable securities** | **$41,037** | **$30,002** | **$20,014** | | U.S. Government and agency obligations (long-term) | $20,000 | $36,098 | $61,191 | | **Total long-term marketable securities** | **$20,000** | **$36,098** | **$61,191** | | **Total marketable securities** | **$61,037** | **$66,100** | **$81,205** | [Note 10. Fair Value Measurement](index=17&type=section&id=Note%2010.%20Fair%20Value%20Measurement) Fair Value Measurement of Assets and Liabilities (June 30, 2019, in thousands) | Category | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :------------------------ | :------ | :------ | :------ | :------ | | **Assets:** | | | | | | Money market funds | $17,790 | — | — | $17,790 | | Restricted cash | $5,825 | — | — | $5,825 | | **Total assets** | **$23,615** | **—** | **—** | **$23,615** | | **Liabilities:** | | | | | | Interest rate cash flow hedge | — | $4,985 | — | $4,985 | | **Total liabilities** | **—** | **$4,985** | **—** | **$4,985** | - In February 2019, Granite entered into a commodity swap, designated as a cash flow hedge, for approximately **60.0%** of forecasted fixed-price asphalt purchases from March to October 2019. As of June 30, 2019, the fair value of this hedge was **$0.2 million**, reported in other current assets[55](index=55&type=chunk) [Note 11. Construction Joint Ventures](index=19&type=section&id=Note%2011.%20Construction%20Joint%20Ventures) - Granite participates in various construction joint ventures, some of which are consolidated (CCJVs) as variable interest entities where Granite is the primary beneficiary, and others are unconsolidated (UCJVs)[58](index=58&type=chunk) - As of June 30, 2019, Granite was engaged in **eight active CCJV projects** with combined total contract values of **$1.3 billion**, and **nine active UCJV projects** with combined total contract values of **$11.4 billion** (Granite's share: **$3.3 billion**)[60](index=60&type=chunk)[61](index=61&type=chunk) - For the six months ended June 30, 2019, UCJVs resulted in a net loss of **$(13.7) million**, with Granite's share being a net loss of **$(105.8) million**. This contrasts with UCJV net income (loss) of **$(114.4) million** for the same period in 2018, where Granite's share was a net loss of **$(13.4) million**[66](index=66&type=chunk) [Note 12. Investments in Affiliates](index=22&type=section&id=Note%2012.%20Investments%20in%20Affiliates) Investments in Affiliates by Type (in thousands) | Type | June 30, 2019 (in thousands) | December 31, 2018 (in thousands) | June 30, 2018 (in thousands) | | :----------- | :------------ | :---------------- | :------------ | | Foreign | $55,563 | $55,715 | $63,000 | | Real estate | $17,781 | $19,676 | $27,591 | | Asphalt terminal | $8,765 | $8,963 | $8,904 | | **Total** | **$82,109** | **$84,354** | **$99,495** | [Note 13. Property and Equipment, net](index=22&type=section&id=Note%2013.%20Property%20and%20Equipment%2C%20net) Property and Equipment, Net (in thousands) | Category | June 30, 2019 (in thousands) | December 31, 2018 (in thousands) | June 30, 2018 (in thousands) | | :-------------------------------- | :------------ | :---------------- | :------------ | | Equipment and vehicles | $943,456 | $906,275 | $933,951 | | Quarry property | $191,972 | $180,246 | $178,809 | | Land and land improvements | $134,151 | $142,271 | $141,549 | | Buildings and leasehold improvements | $109,356 | $108,884 | $105,038 | | Office furniture and equipment | $66,587 | $65,680 | $63,806 | | Total property and equipment | $1,445,522 | $1,403,356 | $1,423,153 | | Less: accumulated depreciation and depletion | $888,404 | $853,668 | $827,366 | | **Property and equipment, net** | **$557,118** | **$549,688** | **$595,787** | [Note 14. Long-Term Debt and Credit Arrangements](index=23&type=section&id=Note%2014.%20Long-Term%20Debt%20and%20Credit%20Arrangements) Long-Term Debt (in thousands) | Category | June 30, 2019 (in thousands) | December 31, 2018 (in thousands) | June 30, 2018 (in thousands) | | :-------------------------------- | :------------ | :---------------- | :------------ | | Senior notes payable | $40,000 | $40,000 | $80,000 | | Credit Agreement term loan | $142,500 | $146,250 | $150,000 | | Credit Agreement revolving credit loan | $220,000 | $197,000 | $99,000 | | Convertible notes | — | — | $160,765 | | Other | $12,793 | $(845) | $(1,073) | | **Total debt** | **$415,293** | **$382,405** | **$488,692** | | Less current maturities | $48,397 | $47,286 | $207,982 | | **Total long-term debt** | **$366,896** | **$335,119** | **$280,710** | - As of June 30, 2019, **$142.5 million** was outstanding on the term loan and **$220.0 million** on the revolving credit facility under the Credit Agreement. The total unused availability under the Credit Agreement was **$97.7 million**[72](index=72&type=chunk)[74](index=74&type=chunk) - Granite was compliant with financial covenants (Consolidated Interest Coverage Ratio of **11.28** vs. minimum **4.00**; Consolidated Leverage Ratio of **2.09** vs. maximum **3.25**) as of June 30, 2019, following Amendment No. 1 to the Credit Agreement. The **$40.0 million** outstanding 2019 Notes were redeemed on July 29, 2019[78](index=78&type=chunk)[79](index=79&type=chunk) [Note 15. Leases](index=24&type=section&id=Note%2015.%20Leases) - As of June 30, 2019, operating leases were recorded as ROU assets of **$73.4 million**, accrued and other current liabilities of **$15.6 million**, and lease liabilities of **$60.9 million**[80](index=80&type=chunk) - Lease expense for the three and six months ended June 30, 2019, was **$4.6 million** and **$8.9 million**, respectively. The weighted-average remaining lease term was **6.3 years**, and the weighted-average discount rate was **4.08%**[81](index=81&type=chunk) [Note 16. Weighted Average Shares Outstanding and Net Loss Per Share](index=25&type=section&id=Note%2016.%20Weighted%20Average%20Shares%20Outstanding%20and%20Net%20Loss%20Per%20Share) Weighted Average Shares Outstanding and Net Loss Per Share | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss allocated to common shareholders for basic calculation (in thousands) | $(97,836) | $(8,385) | $(132,410) | $(19,808) | | Weighted average common shares outstanding, basic (in thousands) | 46,824 | 41,044 | 46,762 | 40,074 | | Net loss per share, basic | $(2.09) | $(0.20) | $(2.83) | $(0.49) | | Net loss per share, diluted | $(2.09) | $(0.20) | $(2.83) | $(0.49) | - Due to net losses, RSUs and convertible notes were excluded from diluted EPS calculations as their inclusion would be antidilutive[84](index=84&type=chunk) [Note 17. Income Taxes](index=25&type=section&id=Note%2017.%20Income%20Taxes) (Benefit from) Provision for Income Taxes | Metric | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | (Benefit from) provision for income taxes | $(31,760) | $2,796 | $(40,925) | $(1,335) | | Effective tax rate | 25.3% | (85.1)% | 24.7% | 7.8% | - The effective tax rate increased in 2019 primarily due to a discrete tax benefit of **$37.0 million** on a **$143.7 million** decrease to project profitability in Q2 2019, related to four legacy, unconsolidated heavy civil joint venture projects, contrasting with a discrete tax expense on non-deductible acquisition and integration expenses in Q2 2018[85](index=85&type=chunk) [Note 18. Legal Proceedings](index=26&type=section&id=Note%2018.%20Legal%20Proceedings) - Granite and its affiliates are involved in various legal proceedings and government inquiries in the ordinary course of business, with outcomes that cannot be predicted with certainty[88](index=88&type=chunk) - While aggregate recorded liabilities for probable and estimable losses were immaterial as of June 30, 2019, the aggregate range of possible loss for reasonably possible contingencies could have a material impact on financial statements if realized[91](index=91&type=chunk) [Note 19. Business Segment Information](index=27&type=section&id=Note%2019.%20Business%20Segment%20Information) Total Revenue from Reportable Segments (in thousands) | Segment | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Transportation | $403,978 | $502,711 | $742,188 | $861,856 | | Water | $112,831 | $51,618 | $212,086 | $91,659 | | Specialty | $175,084 | $151,842 | $315,777 | $270,313 | | Materials | $143,010 | $146,197 | $192,243 | $199,519 | | **Total** | **$834,903** | **$852,368** | **$1,462,294** | **$1,423,347** | Gross (Loss) Profit from Reportable Segments (in thousands) | Segment | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Transportation | $(99,879) | $35,963 | $(78,629) | $67,425 | | Water | $11,263 | $5,450 | $19,382 | $17,014 | | Specialty | $22,210 | $21,476 | $37,077 | $37,212 | | Materials | $14,002 | $17,480 | $10,244 | $15,001 | | **Total** | **$(52,404)** | **$80,369** | **$(11,926)** | **$136,652** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis of Granite's financial condition, operational results, and liquidity, including business overview and economic outlook [Forward-Looking Disclosure](index=29&type=section&id=Forward-Looking%20Disclosure) - The report contains forward-looking statements regarding future events, performance, and outlook, which are estimates based on management's best judgment and are subject to inherent risks and uncertainties[96](index=96&type=chunk) [Overview](index=29&type=section&id=Overview) - Granite is a diversified infrastructure company in the U.S., operating in four reportable segments: Transportation, Water, Specialty, and Materials, with key operating groups including California, Northwest, Heavy Civil, Federal, Midwest, and Water and Mineral Services[97](index=97&type=chunk) - The business is driven by five primary economic factors: U.S. economy health, public funding levels, population growth, aging infrastructure needs, and commodity pricing[98](index=98&type=chunk) - Recent acquisitions include Layne Christensen Company and LiquiForce in 2018, and Lametti & Sons, Inc. for **$6.2 million cash** in May 2019[99](index=99&type=chunk) [Current Economic Environment and Outlook](index=30&type=section&id=Current%20Economic%20Environment%20and%20Outlook) - Inclement weather in the first half of 2019 negatively impacted operations, but public and private market demand remains robust across Granite's end markets[102](index=102&type=chunk) - Committed and Awarded Projects (CAP) totaled nearly **$4.9 billion** as of June 30, 2019, including **$3.8 billion** in contract backlog and an additional **$1.1 billion** in construction manager/general contractor and alternative procurement projects[102](index=102&type=chunk) - Granite is accelerating a strategic review of its Heavy Civil operating group to reduce risk and exposure to large, complex projects, focusing on lower-risk, higher-margin opportunities like negotiated work and construction management[105](index=105&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) [Overall Financial Summary](index=31&type=section&id=Overall%20Financial%20Summary) Financial Summary (in thousands) | Metric | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $789,540 | $807,119 | $1,409,341 | $1,370,498 | | Gross (loss) profit | $(52,404) | $80,369 | $(11,926) | $136,652 | | Operating loss | $(126,644) | $(5,729) | $(168,744) | $(18,564) | | Net loss attributable to Granite Construction Incorporated | $(97,836) | $(8,385) | $(132,410) | $(19,808) | [Revenue Analysis](index=31&type=section&id=Revenue%20Analysis) Total Revenue by Segment (in thousands) | Segment | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Transportation | $403,978 (51.2%) | $502,711 (62.3%) | $742,188 (52.7%) | $861,856 (62.9%) | | Water | $112,831 (14.3%) | $51,618 (6.4%) | $212,086 (15.0%) | $91,659 (6.7%) | | Specialty | $175,084 (22.2%) | $151,842 (18.8%) | $315,777 (22.4%) | $270,313 (19.7%) | | Materials | $97,647 (12.3%) | $100,948 (12.5%) | $139,290 (9.9%) | $146,670 (10.7%) | | **Total** | **$789,540 (100.0%)** | **$807,119 (100.0%)** | **$1,409,341 (100.0%)** | **$1,370,498 (100.0%)** | - Transportation revenue decreased by **19.6%** and **13.9%** for the three and six months ended June 30, 2019, respectively, primarily due to revisions in estimates in the Heavy Civil operating group and unfavorable weather in California, partially offset by growth in the Northwest[109](index=109&type=chunk) - Water revenue increased by over **100%** for both periods, driven by the acquisition of Layne and LiquiForce, particularly in the Water and Mineral Services operating group[111](index=111&type=chunk) - Specialty revenue increased by **15.3%** and **16.8%** for the three and six months ended June 30, 2019, respectively, mainly due to the Layne acquisition and progress on existing projects[112](index=112&type=chunk) - Materials revenue remained relatively unchanged for the three months but decreased by **5.0%** for the six months ended June 30, 2019, primarily due to reduced volume in California from unfavorable weather, partially offset by the Layne acquisition[113](index=113&type=chunk) [Contract Backlog](index=33&type=section&id=Contract%20Backlog) Total Contract Backlog by Segment (in thousands) | Segment | June 30, 2019 (in thousands) | March 31, 2019 (in thousands) | June 30, 2018 (in thousands) | | :-------------- | :------------ | :------------- | :------------ | | Transportation | $2,939,727 (77.0%) | $2,783,252 (77.5%) | $2,637,055 (72.2%) | | Water | $318,111 (8.3%) | $317,782 (8.8%) | $398,886 (10.9%) | | Specialty | $559,264 (14.7%) | $490,231 (13.7%) | $615,981 (16.9%) | | **Total** | **$3,817,102 (100.0%)** | **$3,591,265 (100.0%)** | **$3,651,922 (100.0%)** | - Transportation contract backlog increased by **5.6%** to **$2.9 billion** at June 30, 2019, driven by new awards in California and Northwest, despite progress on existing jobs in Heavy Civil and Midwest[117](index=117&type=chunk) - Four contracts in the Transportation segment had total forecasted losses with remaining revenue of **$326.0 million**, representing **11.1%** of the segment's backlog at June 30, 2019[118](index=118&type=chunk) - Specialty contract backlog increased by **14.1%** to **$559.3 million** at June 30, 2019, due to increased bidding success in California, Northwest, and Federal operating groups[122](index=122&type=chunk) [Gross (Loss) Profit Analysis](index=35&type=section&id=Gross%20(Loss)Profit%20Analysis) Gross (Loss) Profit by Segment (in thousands) | Segment | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Transportation | $(99,879) (-24.7%) | $35,963 (7.2%) | $(78,629) (-10.6%) | $67,425 (7.8%) | | Water | $11,263 (10.0%) | $5,450 (10.6%) | $19,382 (9.1%) | $17,014 (18.6%) | | Specialty | $22,210 (12.7%) | $21,476 (14.1%) | $37,077 (11.7%) | $37,212 (13.8%) | | Materials | $14,002 (14.3%) | $17,480 (17.3%) | $10,244 (7.4%) | $15,001 (10.2%) | | **Total** | **$(52,404) (-6.6%)** | **$80,369 (10.0%)** | **$(11,926) (-0.8%)** | **$136,652 (10.0%)** | - Transportation gross loss significantly increased by over **100%** for both periods, primarily due to increased negative net impact from revisions in estimates in the Heavy Civil operating group[125](index=125&type=chunk) - Water gross profit increased due to higher revenue volume from the Layne acquisition, but its percentage of segment revenue decreased for the six-month period due to unfavorable weather in California and non-recurring emergency work in 2018[126](index=126&type=chunk) - Materials gross profit decreased by **19.9%** and **31.7%** for the three and six months, respectively, mainly due to reduced revenue in California and Northwest from unfavorable weather, leading to decreased fixed cost absorption[128](index=128&type=chunk) [Selling, General and Administrative Expenses](index=36&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) Selling, General and Administrative Expenses (in thousands) | Category | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total selling | $18,696 | $19,674 | $40,892 | $37,477 | | Total general and administrative | $51,302 | $41,642 | $110,261 | $85,091 | | **Total SG&A** | **$69,998 (8.9% of revenue)** | **$61,316 (7.6% of revenue)** | **$151,153 (10.7% of revenue)** | **$122,568 (8.9% of revenue)** | - SG&A expenses increased by **14.2%** and **23.3%** for the three and six months ended June 30, 2019, respectively, primarily due to the addition of expenses from the Layne and LiquiForce acquisitions[130](index=130&type=chunk) - General and administrative expenses rose due to increases in salaries and other G&A expenses from acquisitions, as well as a change in the fair market value of the Non-Qualified Deferred Compensation plan liability[132](index=132&type=chunk) [Acquisition and Integration expenses](index=36&type=section&id=Acquisition%20and%20Integration%20expenses) Acquisition and Integration Expenses (in thousands) | Metric | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Acquisition and integration expenses | $9,177 | $26,287 | $12,500 | $34,696 | - Acquisition and integration expenses decreased in 2019 compared to 2018, as 2019 expenses were primarily related to integration rather than acquisition[133](index=133&type=chunk) [Income Taxes](index=37&type=section&id=Income%20Taxes) (Benefit from) Provision for Income Taxes | Metric | Three Months Ended June 30, 2019 (in thousands) | Three Months Ended June 30, 2018 (in thousands) | Six Months Ended June 30, 2019 (in thousands) | Six Months Ended June 30, 2018 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | (Benefit from) provision for income taxes | $(31,760) | $2,796 | $(40,925) | $(1,335) | | Effective tax rate | 25.3% | (85.1)% | 24.7% | 7.8% | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) [Overview of Liquidity](index=37&type=section&id=Overview%20of%20Liquidity) - Granite believes its cash, short-term investments, available borrowing capacity, and operating cash flows will be sufficient to meet liquidity needs for the next twelve months[136](index=136&type=chunk) - As of June 30, 2019, Granite had **$97.7 million** available for borrowing under its revolving credit facility, with an uncommitted option to increase the facility by **$200.0 million**[136](index=136&type=chunk) Total Cash, Cash Equivalents and Marketable Securities (in thousands) | Category | June 30, 2019 (in thousands) | December 31, 2018 (in thousands) | June 30, 2018 (in thousands) | | :--------------------------------------- | :------------ | :---------------- | :------------ | | Total consolidated cash and cash equivalents | $144,958 | $272,804 | $195,515 | | Short-term and long-term marketable securities | $61,037 | $66,100 | $81,205 | | **Total cash, cash equivalents and marketable securities** | **$205,995** | **$338,904** | **$276,720** | [Cash Flows Analysis](index=38&type=section&id=Cash%20Flows%20Analysis) Net Cash Provided by (Used in) Activities (Six Months Ended June 30, in thousands) | Activity | 2019 (in thousands) | 2018 (in thousands) | | :------------------------ | :----- | :----- | | Operating activities | $(93,515) | $(75,445) | | Investing activities | $(47,926) | $(38,480) | | Financing activities | $13,595 | $81,475 | - Cash used in operating activities increased by **$18.1 million** in 2019 compared to 2018, primarily due to a **$37.1 million** increase in net loss after non-cash adjustments, partially offset by a **$19.0 million** increase in cash from working capital[144](index=144&type=chunk) - Cash provided by financing activities decreased by **$67.9 million** in 2019, mainly due to increased payments on the revolving credit facility and decreased proceeds from long-term debt compared to 2018, which included funding for Layne and LiquiForce acquisitions[146](index=146&type=chunk) [Capital Expenditures](index=38&type=section&id=Capital%20Expenditures) - Capital expenditures for the six months ended June 30, 2019, were **$54.4 million**, up from **$36.5 million** in 2018. Major expenditures are for production facilities, reserves, construction equipment, and IT systems[147](index=147&type=chunk) - Granite anticipates full-year 2019 capital expenditures to be between **$80.0 million** and **$100.0 million**[147](index=147&type=chunk) [Derivatives](index=39&type=section&id=Derivatives) - A commodity swap entered in February 2019, designated as a cash flow hedge for asphalt purchases, had a fair value of **$0.2 million** as of June 30, 2019, reported in other current assets[150](index=150&type=chunk) [Surety Bonds and Real Estate Mortgages](index=39&type=section&id=Surety%20Bonds%20and%20Real%20Estate%20Mortgages) - Approximately **$3.4 billion** of Granite's contract backlog was bonded at June 30, 2019, requiring maintenance of satisfactory cash and working capital balances for sureties[151](index=151&type=chunk) - Investments in real estate affiliates are subject to non-recourse mortgage indebtedness, with terms renegotiated as projects progress[152](index=152&type=chunk) [Covenants and Events of Default](index=39&type=section&id=Covenants%20and%20Events%20of%20Default) - As of June 30, 2019, Granite was compliant with the financial covenants of its Credit Agreement, including a Consolidated Interest Coverage Ratio of **11.28** (minimum **4.00**) and a Consolidated Leverage Ratio of **2.09** (maximum **3.25**)[154](index=154&type=chunk)[155](index=155&type=chunk) [Share Repurchase Program](index=39&type=section&id=Share%20Repurchase%20Program) - The Board authorized a **$200.0 million** common stock repurchase program in April 2016, with **$190.0 million** remaining available as of June 30, 2019. No shares were repurchased under this program in the periods presented[156](index=156&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No significant change in Granite's exposure to market risks since December 31, 2018 - No significant change in market risk exposure since December 31, 2018[158](index=158&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Details the evaluation of the company's disclosure controls and procedures and changes in internal control over financial reporting [Evaluation of Disclosure Control and Procedures](index=41&type=section&id=Evaluation%20of%20Disclosure%20Control%20and%20Procedures) - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2019, providing reasonable assurance for timely and accurate reporting[159](index=159&type=chunk) [Changes in Internal Control Over Financial Reporting](index=41&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - New controls were implemented during the quarter ended June 30, 2019, related to the Layne enterprise resource planning system integration. No other material changes to internal control over financial reporting occurred[160](index=160&type=chunk) [PART II. OTHER INFORMATION](index=41&type=section&id=PART%20II.%20OTHER%20INFORMATION) Provides additional information including legal proceedings, risk factors, equity sales, mine safety disclosures, and a list of exhibits [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) Incorporates by reference the detailed discussion of legal proceedings from Note 18 of the financial statements - The description of legal proceedings is incorporated by reference from Note 18 of the Condensed Consolidated Financial Statements[161](index=161&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to risk factors previously disclosed in the Annual Report on Form 10-K - No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2018[162](index=162&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Provides information on common stock repurchases during the quarter, primarily for employee tax withholding related to vested restricted stock units Common Stock Repurchases (Three Months Ended June 30, 2019) | Period | Total number of shares purchased | Average price paid per share | | :--------------------------------- | :----------------------------- | :--------------------------- | | April 1, 2019 through April 30, 2019 | 753 | $43.31 | | May 1, 2019 through May 31, 2019 | 135 | $40.18 | | June 1, 2019 through June 30, 2019 | 1,099 | $40.19 | | **Total** | **1,987** | **$41.37** | - Shares purchased were in connection with employee tax withholding for units vested under the 2012 Equity Incentive Plan. No shares were purchased under the publicly announced share repurchase program during these periods[163](index=163&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Refers to Exhibit 95 for information concerning mine safety violations or other regulatory matters - Mine safety disclosures are included in Exhibit 95 to this Quarterly Report on Form 10-Q[164](index=164&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications and XBRL documents - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32), Mine Safety Disclosure (Exhibit 95), and various XBRL exhibits (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE)[165](index=165&type=chunk) [SIGNATURES](index=42&type=section&id=SIGNATURES) Contains the signature of the authorized officer, Jigisha Desai, confirming the filing of the report - The report is signed by Jigisha Desai, Senior Vice President and Chief Financial Officer, on August 5, 2019[168](index=168&type=chunk)

RANITE Granite is America's Infrastructure Company Q2 | FY 2019 EARNINGS CONFERENCE CALL SAFE HARBOR Any statements contained in this presentation that are not based on historical facts, including statements regarding future events, occurrences, circumstances, activities, performance, growth, demand, strategic plans, outcomes, guidance, backlog, Committed and Awarded Projects (CAP), and results, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 1-12911 GRANITE CONSTRUCTION INCORPORATED State of Incorporation: I.R.S. Employer Identification Number: Delaware 77-0 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number 1-12911 Granite Construction Incorporated (Exact name of registrant as specified in its charter) Delaware 77-0239383 (State or other jur ...