Core Viewpoint - Granite Construction Incorporated (GVA) has secured a $66 million contract from the California Department of Transportation for improvements to the Caldwell Avenue interchange on SR99, which is expected to enhance regional infrastructure and traffic flow [1][4][5]. Project Details - The project includes the construction of two new precast girder bridges, 12 retaining walls, and four new on- and off-ramps controlled by roundabouts [2][3]. - Approximately 216,000 cubic yards of import borrow will be required for roadway expansion, along with upgrades to the drainage system, new pavement markings, roadside signage, and replacement of highway electrical systems [3]. Strategic Growth and Regional Impact - The project is expected to benefit both the traveling public and regional development, aligning with another pavement rehabilitation project in nearby Tulare scheduled for 2025 [4]. - This contract reinforces Granite's leadership in transportation infrastructure and positions the company for continued growth, supported by federal and state funding [5]. CAP and Market Conditions - Granite is focusing on expanding its high-quality committed and awarded projects (CAP) portfolio, which totaled $5.3 billion in 2024, despite a sequential decline of $324 million and a year-over-year decrease of $250 million [6][7]. - Bidding activity remains strong, with expectations for significant project awards in the first half of 2025, indicating potential growth opportunities [7]. Stock Performance - GVA's shares have declined by 15.6% year to date, slightly better than the 16.4% decline in the Zacks Building Products - Heavy Construction industry, with the company optimistic about growth opportunities in public and private markets [9].

Revenue Sources - Approximately 75% of the Construction Segment revenue in 2024 was derived from contracts funded by government agencies[56] - Approximately 75% of the company's construction revenue for the year ended December 31, 2024, was funded by federal, state, and local government agencies[93] - A significant portion of the company's revenue is derived from project-based work, making cash flows and financial results unpredictable due to the timing of new contracts and terminations[14] Contractual Risks - The percentage of fixed unit price contracts in unearned revenue was 59.1% and 63.5% at December 31, 2024 and 2023, respectively[60] - The percentage of fixed price contracts in unearned revenue was 33.2% and 30.5% at December 31, 2024 and 2023, respectively[61] - Fixed price contracts expose the company to risks of increased project costs due to inflation and inefficiencies, potentially impacting profitability[93] - The company faces risks related to the modification, delay, or termination of U.S. federal government contracts, which could materially affect its financial condition and results of operations[14] - The company may experience revenue declines if anticipated project volumes are not assigned or if contracts are canceled, as many contracts are open to competitive bidding[97] Financial Position and Performance - The company faces risks from unfavorable economic conditions, including inflation and high interest rates, which could adversely affect its financial position and results of operations[93] - Economic factors, including inflation and rising interest rates, could adversely affect the company's financial position and results of operations[100] - The company may incur significant out-of-pocket expenditures if it acquires liabilities that are not adequately covered by insurance or indemnity agreements[106] - The company is required to make contributions to certain multi-employer pension plans, which could lead to material cash contributions in the future[112] - The company has significant debt obligations, including $373.75 million in 3.75% Convertible Notes due in 2028 and $373.75 million in 3.25% Convertible Notes due thereafter[235] Operational Risks - The company’s operations are significantly affected by weather conditions, particularly in the first and fourth quarters, which can lead to variability in revenues and profitability[79] - Weather conditions significantly affect the company's ability to perform work, leading to variability in quarterly revenues and profitability[100] - Public health events, such as pandemics, could disrupt the company's operations and negatively impact its financial condition[100] - Strikes or work stoppages could significantly impact the company's operations and results in the future[108] Compliance and Regulatory Risks - The company is subject to various government regulations, including environmental, health and safety, and anti-corruption laws, which may impose additional costs on operations[58] - Noncompliance with environmental regulations could result in substantial penalties or termination of government contracts[114] - The company is subject to strict regulatory requirements for government contracts, which could lead to suspension or debarment from contracting[112] - The company may be exposed to liabilities under the Foreign Corrupt Practices Act (FCPA), which could adversely affect its financial position[115] Joint Ventures and Partnerships - The company participates in joint ventures for large, complex projects, sharing expertise and resources with partners[68] - The company faces risks related to joint ventures, including potential liabilities if partners fail to perform under contracts[110] Equipment and Asset Management - The company purchased $59.2 million and $71.9 million of construction equipment and vehicles in 2024 and 2023, respectively[78] - As of December 31, 2024, the company owned 2,645 heavy construction equipment and 4,725 trucks and vehicles, an increase from 2,457 and 4,686 in 2023[78] - The company continually monitors and adjusts its fleet size to align with existing and expected future work[78] - The company’s equipment count includes 189 pieces of heavy construction equipment and 206 vehicles from the D&B acquisition[78] Financial Management and Investments - The company has a cash and cash equivalents balance of $585.6 million with a weighted average interest rate of 4.34% as of December 31, 2024[235] - The fair value of the 3.75% Convertible Notes was approximately $738.7 million as of December 31, 2024, up from $475.6 million in 2023[235] - The company maintains an investment portfolio targeted to an average maturity of no more than one year from the date of purchase[230] - The company’s investment policy limits credit exposure to any one issue, issuer, or type of instrument[230] Market and Competitive Environment - The company has a competitive marketplace with multiple competitors, which may lead to decreased profit margins and new awards[93] - The company's stock price has historically been volatile, influenced by market factors and operational results[125] - Delaware law and the company's charter may impede takeovers, potentially reducing increases in the market price of common stock[125] Risk Management and Mitigation - The company maintains insurance coverage consistent with industry practice, including general and excess liability, property, and workers' compensation[75] - The company has a co-surety structure involving three sureties to mitigate risks associated with obtaining surety bonds[76] - The company has implemented proactive measures to mitigate the impact of inflation and supply chain constraints, including fixed forward purchase contracts and energy surcharges[77] - The company faces physical, transition, and regulatory risks related to climate change that could materially impact its business and financial condition[128] - The company is committed to advancing its sustainability strategy, but achieving its commitments is subject to various risks and uncertainties[128] Internal Controls and Governance - The company identified material weaknesses in internal control over financial reporting in previous years, which have now been remediated[116] - Future identification of material weaknesses could lead to inaccurate financial reporting and loss of investor confidence, potentially decreasing the market price of common stock[116] - The company may incur significant expenses related to litigation or regulatory investigations due to past financial statement restatements[118] - Cybersecurity incidents, including ransomware and unauthorized access, could result in business interruptions and remediation costs, adversely affecting financial position[120] - The company has developed pilot programs for generative artificial intelligence tools, including a knowledge retention tool and a risk detection tool, which may present risks if misused[120] Debt and Financing - The company may borrow on the Revolver at a margin ranging from 1.0% to 2.0% based on its Consolidated Leverage Ratio, with nothing drawn on the Revolver as of December 31, 2024[234] - The company’s 3.25% and 3.75% Convertible Notes may dilute existing stockholders' ownership interests upon conversion[123] - The capped call transactions related to the Convertible Notes may affect the value of common stock and could lead to dilution if market prices exceed cap prices[124]

Financial Data and Key Metrics Changes - Revenue increased 14% to $4 billion in 2024 [24] - Gross profit increased 44% to $573 million [24] - Adjusted net income increased 45% to $214 million [24] - Adjusted EBITDA increased 44% to $402 million [24] - Operating cash flow increased 148% to $456 million [24][31] Business Line Data and Key Metrics Changes Construction Segment - Revenue increased $28 million or 3% year-over-year to $821 million [26] - Gross profit improved $56 million to $128 million with a segment gross profit margin of 16% [27] - The increase in gross profit margin was driven by a higher quality project portfolio [27] Materials Segment - Revenue increased $16 million with gross profit up slightly to $23 million [28] - Cash gross profit increased $7 million year-over-year to $37 million or 21% for the quarter [29] - Cash gross profit margin improved by 240 basis points year-over-year to 21.4% for the full year [30] Market Data and Key Metrics Changes - State transportation budgets are near record levels, supported by the Federal Infrastructure Bill [14][15] - Approximately 75% of the construction segment is publicly funded, with strong opportunities in water infrastructure and commercial site development [16][18] Company Strategy and Development Direction - The company is focused on growing its businesses while generating strong cash flow and delivering consistent profitability [12] - Plans to explore potential acquisitions to expand its vertically integrated strategy into new markets [12][22] - Targeting two to three M&A deals per year to strengthen its Western and Southeastern footprints [22] Management Comments on Operating Environment and Future Outlook - The management believes the current construction market is the strongest seen in years, with significant opportunities for growth [14] - Expectations for organic revenue growth in the construction segment driven by a strong market environment [22] - Anticipated adjusted EBITDA margin range for 2025 is 11% to 12%, representing a 10% to 20% increase from 2024 [40] Other Important Information - The company ended the year with $586 million in cash and marketable securities [33] - Plans to invest in capital expenditures in the range of $140 million to $160 million for strategic materials investment and automation projects [37] Q&A Session Summary Question: Sales guidance and margin expansion - Management discussed that the low end of sales guidance implies a modest decline, but margin expansion is expected due to strong CAP and project quality [45][48] Question: Regional market outlook for 2025 - Management indicated strong performance across all geographies, with expectations for continued growth in CAP and project awards [62][65] Question: Free cash flow expectations for 2025 - Management expressed satisfaction with cash flow performance and targeted free cash flow around 50% of EBITDA going forward [80] Question: Inflation expectations in 2025 - Management anticipates inflation closer to 3%, which is already factored into pricing strategies [84] Question: Gain on sales of assets - Management confirmed that a gain on the sale of an asset expected in Q4 was pushed to 2025, which could positively impact guidance [90][91]

Q4 2024 Earnings Presentation © 2025 Granite Construction. All Rights Reserved. Safe Harbor Any statements contained in this presentation that are not based on historical facts, including statements regarding future events, occurrences, circumstances, opportunities, targets, activities, performance, growth, demand, strategy, strategic goals, shareholder value, outcomes, outlook, medium-term financial growth and the drivers of such growth, expectation for larger M&A with a 2.5x long term leverage target, 202 ...

Financial Performance - Fourth Quarter 2024 net income was $41 million, or $0.84 per diluted share, compared to $26 million, or $0.55 per diluted share in the prior year, representing a 57.7% increase in net income year-over-year [3]. - Fiscal Year 2024 net income totaled $126 million, or $2.62 per diluted share, compared to $44 million, or $0.97 per diluted share in the prior year, marking a 186.4% increase in net income year-over-year [5]. - Total revenue for the year ended December 31, 2024, was $4,007,574, an increase of 14.1% compared to $3,509,138 in 2023 [26]. - Gross profit for the year ended December 31, 2024, was $572,697, representing a 44.3% increase from $396,399 in 2023 [26]. - Net income attributable to Granite Construction for the year ended December 31, 2024, was $126,346, a significant increase from $43,599 in 2023 [26]. - Operating income for the year ended December 31, 2024, was $207,363, compared to $80,062 in 2023, indicating a 158.5% increase [26]. - Basic net income per share for the year ended December 31, 2024, was $2.88, compared to $0.99 in 2023, representing a 189.9% increase [26]. - Net income attributable to Granite Construction for Q4 2024 was $41.5 million, up from $26.0 million in Q4 2023, representing a 59.5% increase [34]. - EBITDA for Q4 2024 reached $96.1 million, compared to $61.7 million in Q4 2023, reflecting a 55.5% growth [34]. - Adjusted net income attributable to Granite Construction for Q4 2024 was $55.7 million, compared to $37.7 million in Q4 2023, representing a 47.8% increase [38]. - The company reported a diluted net income per share of $0.84 for Q4 2024, compared to $0.55 in Q4 2023, reflecting a 52.7% increase [38]. Revenue and Growth - Fourth Quarter 2024 revenue increased 5% year-over-year to $977 million, while Fiscal Year 2024 revenue increased 14% year-over-year to $4.0 billion [8]. - Revenue for Q4 2024 was $977 million, up from $934 million in Q4 2023, showing a growth of 4.6% [35]. - The company anticipates continued organic revenue growth of 6.0% to 8.0% through 2027, supported by a strong project portfolio and market environment [16]. Operational Efficiency - Adjusted EBITDA for Fiscal Year 2024 increased by $123 million to $402 million compared to $279 million in the prior year, reflecting a significant improvement in operational efficiency [10]. - Adjusted EBITDA for the fiscal year 2024 was $401.7 million, a significant increase from $279.4 million in 2023, marking a 43.7% rise [34]. - The adjusted EBITDA margin for the fiscal year 2024 was 10.0%, up from 8.0% in 2023, indicating improved operational efficiency [34]. - The net income margin improved to 4.2% in Q4 2024 from 2.8% in Q4 2023, indicating enhanced profitability [34]. - Cash gross profit for Q4 2024 was $37.1 million, with a cash gross profit margin of 23.8%, up from 21.8% in Q4 2023 [42]. Assets and Liabilities - Cash and cash equivalents increased to $578,330 as of December 31, 2024, compared to $417,663 at the end of 2023, reflecting a 38.5% increase [28]. - Total assets grew to $3,025,655 as of December 31, 2024, up from $2,813,540 in 2023, marking a 7.5% increase [24]. - The company reported a total current liabilities of $1,031,959 as of December 31, 2024, slightly up from $1,029,883 in 2023 [24]. - Long-term debt increased to $737,939 as of December 31, 2024, from $614,781 in 2023, reflecting a 20.1% increase [24]. Future Projections - The company expects 2025 revenue in the range of $4.2 billion to $4.4 billion, with an adjusted EBITDA margin of 11.0% to 12.0% [20]. - Capital expenditures for 2025 are projected to be approximately $140 million to $160 million, including strategic materials investments of about $50 million [16]. - Committed and Awarded Projects (CAP) totaled $5.3 billion, a decrease of $324 million sequentially and $250 million year-over-year, with expectations for significant project awards in the first half of 2025 [12]. Cash Position - Granite has $586 million in cash and marketable securities, positioning the company well for M&A opportunities and strategic investments [4].

Group 1 - The company Granite Construction Incorporated (NYSE: GVA) is recognized as a provider of infrastructure solutions and has been viewed positively for several years [1] - The focus of Crude Value Insights is on cash flow and companies that generate it, highlighting the potential for value and growth in the oil and natural gas sector [1] Group 2 - Subscribers to Crude Value Insights benefit from a 50+ stock model account and in-depth cash flow analyses of exploration and production (E&P) firms [2] - The service includes live chat discussions about the oil and gas sector, enhancing community engagement and information sharing [2]

Project Details - Granite Construction Incorporated (GVA) has been awarded an $88 million project by the California Department of Transportation (Caltrans) to improve a portion of Ortega Highway State Route 74 (SR 74) [1] - The project will be funded by state and federal sources, with construction expected to begin in April 2025 and be completed by November 2026 [1] - GVA will include this project in its first quarter of 2025 Committed and Awarded Projects (CAP) [1] Work Scope - The project involves widening shoulders and roadways, installing centerline and edge line rumble strips, and resurfacing the highway to improve safety and efficiency [2] - These enhancements will provide vehicle buffer room, significantly improving safety on the narrow two-lane mountainous highway [2] Strategic Importance - The contract builds on Granite's ongoing efforts on this stretch of highway over the past few years, aligning with its strategic goal of expanding its footprint in the Inland Empire of Southern California [3] - Granite is focusing on growing a high-quality CAP portfolio, leveraging positive public funding and a resilient private market to deliver larger projects while minimizing risk [3] CAP Growth - During the third quarter of 2024, Granite added $44 million to its CAP, bringing the total to $5.6 billion, a $44 million sequential increase and a $35 million year-over-year increase [4] - Best-value projects represented 42% ($2.4 billion) of the company's CAP at the end of the quarter, an increase of $31 million from the year-ago quarter [4] Best-Value Projects - Best-value projects include construction manager, general contractor, and progressive design builds, which Granite believes are more efficiently constructed and have a solid growth trajectory [5] Stock Performance - GVA's shares have gained 39.9% in the past six months, slightly below the Zacks Building Products - Heavy Construction industry's 41.8% growth [7] - The company believes strong opportunities across public and private markets will likely foster growth in the upcoming period [8] Industry Comparison - Weyerhaeuser Company (WY) has a Zacks Rank 1 (Strong Buy) and delivered a trailing four-quarter earnings surprise of 41.6% on average, with a 1.6% loss in the past six months [10] - Frontdoor, Inc. (FTDR) has a Zacks Rank 1 and delivered a trailing four-quarter earnings surprise of 269% on average, with a 57.7% gain in the past six months [10] - MasTec, Inc. (MTZ) has a Zacks Rank 2 (Buy) and delivered a trailing four-quarter earnings surprise of 40.2% on average, with a 53.8% gain in the past six months [11]

Granite Construction Incorporated (GVA) has secured a $71 million contract from the U.S. Army Corps of Engineers to expand and modernize the rail yard at Fort Bliss in El Paso, TX. The project, which is fully funded by federal sources, was included in Granite’s third-quarter 2024 Committed and Awarded Projects (CAP), further solidifying the company’s position in government infrastructure work.Shares of Granite gained 2.6% yesterday during the trading session.Boosting Capacity and Efficiency of GVAThe rail y ...

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