Granite(GVA) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited financial statements, management's discussion, market risk, and controls for the reporting period Item 1. Financial Statements (Unaudited) This section presents Granite Construction's unaudited condensed consolidated financial statements and detailed notes for the reporting periods Condensed Consolidated Balance Sheets This section details the company's financial position at specific dates, outlining assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2022 | December 31, 2021 | March 31, 2021 | | :-------------------------------- | :------------- | :---------------- | :------------- | | Total current assets | $1,592,726 | $1,827,399 | $1,450,741 | | Total assets | $2,282,141 | $2,494,927 | $2,373,684 | | Total current liabilities | $939,254 | $1,069,318 | $1,000,135 | | Total liabilities and equity | $2,282,141 | $2,494,927 | $2,373,684 | | Total Granite Construction Incorporated shareholders' equity | $919,839 | $967,682 | $903,540 | Condensed Consolidated Statements of Operations This section presents the company's financial performance over specific periods, detailing revenue, gross profit, operating loss, and net loss Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenue | $547,586 | $566,332 | | Gross profit | $49,775 | $53,712 | | Operating loss | $(16,608) | $(79,513) | | Net loss from continuing operations | $(15,917) | $(62,401) | | Net income (loss) from discontinued operations | $6,096 | $(2,922) | | Net loss attributable to Granite Construction Incorporated | $(12,939) | $(66,195) | | Basic loss per share | $(0.29) | $(1.45) | | Diluted loss per share | $(0.29) | $(1.45) | Condensed Consolidated Statements of Comprehensive Income (Loss) This section outlines the company's comprehensive income or loss, detailing net loss and other comprehensive income components Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(9,821) | $(65,323) | | Other comprehensive income | $4,932 | $1,319 | | Comprehensive loss | $(4,889) | $(64,004) | | Comprehensive loss attributable to Granite Construction Incorporated | $(8,007) | $(64,876) | Condensed Consolidated Statements of Shareholders' Equity This section details changes in shareholders' equity, including net income, other comprehensive income, stock repurchases, and dividends Shareholders' Equity Changes (in thousands, except share data) | Metric | Balances at Dec 31, 2021 | Balances at Jan 1, 2022 | Balances at Mar 31, 2022 | | :-------------------------------- | :----------------------- | :---------------------- | :----------------------- | | Total Granite Shareholders' Equity | $967,682 | $951,264 | $919,839 | | Net income (loss) | - | - | $(12,939) | | Other comprehensive income | - | - | $4,932 | | Purchases of common stock | - | - | $(20,212) | | Dividends on common stock | - | - | $(5,816) | | Common stock outstanding (shares) | 45,840,260 | 45,840,260 | 45,364,137 | - The company adopted ASU 2020-06 effective January 1, 2022, resulting in a net cumulative decrease to additional paid-in capital and retained earnings of $16.4 million[16] - Common stock repurchases totaled $20.2 million for the three months ended March 31, 2022[16] Condensed Consolidated Statements of Cash Flows This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities | $(50,180) | $38,087 | | Net cash provided by (used in) investing activities | $89,396 | $(16,303) | | Net cash used in financing activities | $(82,904) | $(4,992) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(43,688) | $16,792 | | Cash, cash equivalents and restricted cash at end of period | $369,967 | $454,440 | - Cash used in operating activities increased by $88.3 million YoY, primarily due to changes in working capital[21] - Cash provided by investing activities increased by $105.7 million YoY, mainly due to proceeds from the sale of the Inliner business[21] - Cash used in financing activities increased by $77.9 million YoY, driven by prepayment of term loan and common stock repurchases[21] Notes to the Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Basis of Presentation This note describes the accounting principles and presentation methods used for the unaudited financial statements - The condensed consolidated financial statements are unaudited and prepared in accordance with SEC rules and U.S. GAAP, with certain information condensed or omitted[24] - The former Water and Mineral Services (WMS) operating group is classified as discontinued operations for all periods presented, with related assets and liabilities held for sale[27] - Results for the three months ended March 31, 2022, are not indicative of the full year due to typical weather impacts in the first and fourth quarters[28] 2. Recently Issued and Adopted Accounting Pronouncements This note details the impact of new accounting standards, specifically ASU 2020-06, on the company's financial reporting - Adopted ASU 2020-06 (Accounting for Convertible Instruments) effective January 1, 2022, using the modified retrospective approach[30] - Upon adoption, recorded a net cumulative increase to debt of approximately $22.0 million and to deferred tax assets of $5.6 million, offset by a decrease to additional paid-in capital and retained earnings of $16.4 million[30] - ASU 2020-06 requires the if-converted method for diluted EPS and eliminates the treasury stock method for convertible debt[30][34] 3. Discontinued Operations This note provides information on the classification and financial impact of the divested Water and Mineral Services businesses - The Board approved a plan to sell WMS businesses (Inliner, Water Resources, Mineral Services) in Q4 2021, classifying them as held for sale and discontinued operations[36] - Completed the sale of Inliner on March 16, 2022, for $159.7 million, receiving $142.6 million cash proceeds and recognizing a gain of $6.2 million[37] Summarized Statements of Operations for Discontinued Operations (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $102,961 | $103,581 | | Gross profit | $14,234 | $9,606 | | Operating income (loss) | $7,773 | $(6,178) | | Net income (loss) from discontinued operations | $6,096 | $(2,922) | 4. Revisions in Estimates This note explains the accounting for changes in estimates for construction contracts and their impact on gross profit - Profit recognition on construction contracts is based on estimates, which can vary and are accounted for using the cumulative catch-up method[40][41] - No material revisions in estimates ($5.0 million or more) impacted gross profit for the three months ended March 31, 2022[43] - In Q1 2021, one project had a $5.3 million decrease in gross profit due to lower productivity and weather impacts[43] 5. Disaggregation of Revenue This note breaks down revenue from continuing operations by reportable segments and operating groups - Revenue is disaggregated by reportable segments (Construction and Materials) and operating groups (California, Central, Mountain)[46] Disaggregated Revenue from Continuing Operations (in thousands) | Operating Group | Three Months Ended March 31, 2022 (Total) | Three Months Ended March 31, 2021 (Total) | | :-------------- | :---------------------------------------- | :---------------------------------------- | | California | $190,074 | $201,222 | | Central | $234,455 | $261,673 | | Mountain | $123,057 | $103,437 | | Total | $547,586 | $566,332 | 6. Unearned Revenue This note presents the company's unearned revenue from continuing operations, disaggregated by operating group Unearned Revenue from Continuing Operations (in thousands) | Operating Group | March 31, 2022 | December 31, 2021 | March 31, 2021 | | :-------------- | :------------- | :---------------- | :------------- | | California | $768,013 | $771,759 | $834,815 | | Central | $1,192,812 | $1,334,901 | $1,798,761 | | Mountain | $530,712 | $488,425 | $537,976 | | Total | $2,491,537 | $2,595,085 | $3,171,552 | - Approximately $2.0 billion of the March 31, 2022 unearned revenue is expected to be recognized within the next twelve months[48] 7. Other Costs This note details the components of other costs, primarily non-recurring legal fees and settlement charges - Other costs for Q1 2022 primarily consisted of non-recurring legal fees related to lawsuits[49] - Other costs for Q1 2021 primarily consisted of $66 million in net settlement charges and non-recurring legal/accounting fees related to an independent investigation[49] 8. Contract Assets and Liabilities This note provides details on contract assets and liabilities, including revenue recognition from these balances - Recognized $159.9 million and $139.2 million in revenue from contract liability balances in Q1 2022 and Q1 2021, respectively[51] - Changes in contract transaction price resulted in $41.1 million and $61.5 million in revenue recognition in Q1 2022 and Q1 2021, respectively[52] Contract Assets (in thousands) | Component | March 31, 2022 | December 31, 2021 | March 31, 2021 | | :-------------------------------- | :------------- | :---------------- | :------------- | | Costs in excess of billings and estimated earnings | $45,393 | $14,158 | $39,410 | | Contract retention | $134,630 | $131,279 | $105,370 | | Total contract assets | $180,023 | $145,437 | $144,780 | 9. Receivables, net This note categorizes the company's net receivables, including those from contracts, materials sales, and other sources Major Categories of Receivables (in thousands) | Category | March 31, 2022 | December 31, 2021 | March 31, 2021 | | :-------------------------------- | :------------- | :---------------- | :------------- | | Contracts completed and in progress | $269,820 | $362,424 | $248,828 | | Materials sales | $45,967 | $43,746 | $35,252 | | Other | $65,520 | $59,496 | $110,487 | | Total net receivables | $380,502 | $464,588 | $393,283 | - Other receivables at March 31, 2022 and December 31, 2021 included $24.9 million and $20.4 million, respectively, for a loan to a partner in an unconsolidated joint venture[55] 10. Fair Value Measurement This note details the fair value measurement of assets and liabilities, including derivative instruments Fair Value Measurement of Assets and Liabilities (in thousands) | Item | March 31, 2022 (Total) | December 31, 2021 (Total) | March 31, 2021 (Total) | | :-------------------------------- | :--------------------- | :------------------------ | :--------------------- | | Total assets (fair value) | $24,284 | $65,233 | $43,594 | | Total liabilities (fair value) | $507 | $3,514 | $6,535 | - Terminated $60.9 million of floating-to-fixed interest rate swaps in Q1 2022 due to term loan prepayment[58] - Held commodity swaps for crude oil with a total notional amount of $17.9 million, resulting in a realized gain of $0.4 million and an unrealized gain of $3.3 million in Q1 2022[59] 11. Construction Joint Ventures This note provides information on the company's consolidated and unconsolidated construction joint ventures - Engaged in nine active Consolidated Construction Joint Ventures (CCJVs) with total contract values of $1.7 billion, Granite's share being $960.0 million[65] - CCJVs generated $107.6 million in revenue in Q1 2022, up from $82.6 million in Q1 2021[65] - Engaged in nine active unconsolidated joint venture projects with total contract values of $10.7 billion, Granite's share being $3.0 billion[66] Granite's Interest in Unconsolidated Construction Joint Ventures (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Granite's interest in revenue | $49,655 | $79,722 | | Granite's interest in cost of revenue | $53,269 | $79,336 | | Granite's interest in gross profit (loss) | $(3,614) | $386 | | Granite's interest in net income (loss) | $(3,627) | $418 | 12. Investments in Affiliates This note details the company's investments in affiliates, primarily in real estate and an asphalt terminal Investments in Affiliates (in thousands) | Type | March 31, 2022 | December 31, 2021 | March 31, 2021 | | :-------------------------------- | :------------- | :---------------- | :------------- | | Real estate | $9,629 | $9,619 | $13,105 | | Asphalt terminal | $13,358 | $13,749 | $14,655 | | Total investments in affiliates | $22,987 | $23,368 | $27,760 | - All real estate investments were in residential real estate in Texas, with ownership ranging from 10% to 25% as of March 31, 2022[75] 13. Property and Equipment, net This note presents the net book value of the company's property and equipment, including vehicles and quarry property Property and Equipment, net (in thousands) | Category | March 31, 2022 | December 31, 2021 | March 31, 2021 | | :-------------------------------- | :------------- | :---------------- | :------------- | | Equipment and vehicles | $885,445 | $870,672 | $826,472 | | Quarry property | $205,908 | $191,982 | $202,620 | | Total property and equipment, net | $450,250 | $433,504 | $426,953 | 14. Accrued Expenses and Other Current Liabilities This note itemizes the company's accrued expenses and other current liabilities, such as insurance and payroll Accrued Expenses and Other Current Liabilities (in thousands) | Category | March 31, 2022 | December 31, 2021 | March 31, 2021 | | :-------------------------------- | :------------- | :---------------- | :------------- | | Accrued insurance | $87,265 | $76,999 | $73,831 | | Deficits in unconsolidated construction joint ventures | $14,901 | $28,636 | $55,613 | | Payroll and related employee benefits | $78,731 | $87,460 | $109,169 | | Performance guarantees | $82,112 | $82,112 | $82,280 | | Accrued legal settlement | $129,000 | $129,000 | $129,000 | | Other | $47,516 | $48,622 | $49,934 | | Total | $439,525 | $452,829 | $499,827 | 15. Long-Term Debt and Credit Arrangements This note details the company's long-term debt, including convertible notes and term loans, and credit availability Long-Term Debt (in thousands) | Category | March 31, 2022 | December 31, 2021 | March 31, 2021 | | :-------------------------------- | :------------- | :---------------- | :------------- | | 2.75% Convertible Notes | $230,000 | $207,354 | $202,018 | | Credit Agreement - term loan | $60,938 | $123,750 | $129,375 | | Total long-term debt | $290,549 | $331,191 | $331,647 | - Repaid $60.9 million of the term loan in Q1 2022[78] - Total unused availability under the Credit Agreement was $242.1 million as of March 31, 2022[80] 16. Weighted Average Shares Outstanding and Net Income (Loss) Per Share This note provides the calculation of basic and diluted net loss per share, including weighted average shares Net Loss Per Share (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss allocated to common shareholders | $(12,939) | $(66,195) | | Weighted average common shares outstanding, basic | 45,730 | 45,697 | | Basic loss per share | $(0.29) | $(1.45) | | Diluted loss per share | $(0.29) | $(1.45) | - RSUs and potential dilution from 2.75% Convertible Notes were excluded from diluted EPS calculation due to antidilutive effect[84][85] 17. Income Taxes This note details the benefit from income taxes on continuing operations and the effective tax rate Benefit from Income Taxes on Continuing Operations (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Benefit from income taxes on continuing operations | $(5,331) | $(21,757) | | Effective tax rate | 25.1% | 25.9% | - Effective tax rate for Q1 2022 was consistent with Q1 2021[86] 18. Contingencies - Legal Proceedings This note describes the company's legal proceedings, including settlement agreements and new lawsuits - Total liabilities for legal proceedings were $129.0 million as of March 31, 2022 and December 31, 2021, with $63 million paid through insurance proceeds into a settlement escrow account[89] - The company entered into a settlement agreement for securities class action and derivative lawsuits, agreeing to pay $129.0 million, with $66 million from the company and $63 million from insurance proceeds[94][95][96] - A new lawsuit and arbitration demand totaling approximately $100 million were filed in February 2022 against Layne (a subsidiary) for allegedly defective work on the Salesforce Tower foundation[104] 19. Reportable Segment Information This note provides financial information disaggregated by the company's Construction and Materials reportable segments - The company updated its strategy to focus on core civil construction and materials businesses, reorganizing operating groups and changing reportable segments to Construction and Materials[106][107] Summarized Segment Information (in thousands) | Metric | Construction (2022) | Materials (2022) | Total (2022) | Construction (2021) | Materials (2021) | Total (2021) | | :-------------------------------- | :------------------ | :--------------- | :----------- | :------------------ | :--------------- | :----------- | | Total revenue from reportable segments | $474,935 | $89,554 | $564,489 | $506,971 | $70,452 | $577,423 | | Revenue from external customers | $474,935 | $72,651 | $547,586 | $506,971 | $59,361 | $566,332 | | Gross profit | $48,192 | $1,583 | $49,775 | $52,769 | $943 | $53,712 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, condition, and results, including business overview, economic environment, strategic actions, and liquidity Overview This section provides a high-level summary of Granite's business, strategic focus, and organizational structure - Granite is a diversified infrastructure company primarily serving public and private clients in the U.S., focusing on civil construction and materials[111][112] - The company reorganized its operating groups into California, Central, and Mountain to improve efficiency and align with its new strategic plan[112][113] - Reportable segments are now Construction and Materials, reflecting the CODM's review of financial information[113][114] Current Economic Environment and Outlook This section discusses the impact of the Infrastructure Investment and Jobs Act, state funding, and industry challenges - The $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) is expected to significantly increase federal infrastructure funding, with meaningful project lettings starting in late 2022 and growing in 2023 and beyond[116] - State and local transportation measures, like California's SB-1, continue to support infrastructure spending[117] - Inflation, supply chain, and labor constraints have adversely affected the construction industry, particularly impacting costs for oil-related items, concrete, and steel[118] Strategic Actions This section outlines the company's strategic divestitures and their impact on financial flexibility and core business focus - Planned divestitures of WMS businesses align with the new strategy to focus on core civil construction and materials, using proceeds for investment[121] - The sale of the Inliner business was completed on March 16, 2022, for $159.7 million, generating $142.6 million in cash proceeds[121] - The company ended Q1 2022 with a strong balance sheet and liquidity, providing flexibility for home market expansion[121] Litigation Matter This section details a new lawsuit and arbitration demand against a subsidiary related to alleged defective work - A lawsuit for $70 million and an arbitration demand for $30 million were filed against Layne (a wholly-owned subsidiary) in February 2022, related to its work on the Salesforce Tower foundation[122] Results of Operations This section provides a detailed analysis of the company's revenue, gross profit, and various expenses for the period Revenue This section analyzes total revenue by segment, highlighting changes in Construction and Materials revenue Total Revenue by Segment (in thousands) | Segment | Three Months Ended March 31, 2022 | % of Total (2022) | Three Months Ended March 31, 2021 | % of Total (2021) | | :-------------------------------- | :-------------------------------- | :---------------- | :-------------------------------- | :---------------- | | Construction | $474,935 | 86.7% | $506,971 | 89.5% | | Materials | $72,651 | 13.3% | $59,361 | 10.5% | | Total | $547,586 | 100.0% | $566,332 | 100.0% | - Construction revenue decreased by $32.0 million (6.3%) YoY, primarily due to lower Committed and Awarded Projects (CAP) and less favorable weather in California[126] - Materials revenue increased by $13.3 million (22.4%) YoY, driven by increases in aggregate and asphalt volumes across all operating groups[127] Committed and Awarded Projects (CAP) This section details the company's backlog of committed and awarded projects, including unearned revenue and new awards - CAP remained relatively unchanged at $3.9 billion at March 31, 2022, compared to December 31, 2021[131] Committed and Awarded Projects (in thousands) | Category | March 31, 2022 | % of Total (2022) | December 31, 2021 | % of Total (2021) | March 31, 2021 | % of Total (2021) | | :-------------------------------- | :------------- | :---------------- | :---------------- | :---------------- | :------------- | :---------------- | | Unearned revenue | $2,491,537 | 63.3% | $2,595,085 | 64.7% | $3,171,552 | 76.0% | | Other awards | $1,443,190 | 36.7% | $1,414,979 | 35.3% | $1,000,380 | 24.0% | | Total | $3,934,727 | 100.0% | $4,010,064 | 100.0% | $4,171,932 | 100.0% | - Significant new awards in Q1 2022 included a $32 million highway project, a $22 million train station project in California, and a $20 million road improvement contract in Arizona[131] Gross Profit This section analyzes gross profit by reportable segment, explaining changes in Construction and Materials profitability Gross Profit by Reportable Segment (in thousands) | Segment | Three Months Ended March 31, 2022 | % of Segment Revenue (2022) | Three Months Ended March 31, 2021 | % of Segment Revenue (2021) | | :-------------------------------- | :-------------------------------- | :-------------------------- | :-------------------------------- | :-------------------------- | | Construction | $48,192 | 10.1% | $52,769 | 10.4% | | Materials | $1,583 | 2.2% | $943 | 1.6% | | Total gross profit | $49,775 | 9.1% | $53,712 | 9.5% | - Construction gross profit decreased by $4.6 million (8.7%) YoY due to lower revenue and progression of lower margin work[133] - Materials gross profit increased by $0.6 million (67.9%) YoY due to higher volumes, price increases, and oil price mitigation efforts[134] Selling, General and Administrative Expenses This section details selling, general, and administrative expenses, including changes in non-qualified deferred compensation Selling, General and Administrative Expenses (in thousands) | Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Total selling | $17,256 | $17,343 | | Total general and administrative | $41,245 | $43,818 | | Total selling, general and administrative | $58,501 | $61,161 | | Percent of revenue | 10.7% | 10.8% | - General and administrative expenses decreased by $2.6 million (5.9%) YoY, primarily due to decreases in the fair market value of the Non-Qualified Deferred Compensation plan liability[137] Other Costs This section explains the significant decrease in other costs, primarily due to a prior-year legal settlement charge - Other costs decreased by $66 million YoY, primarily due to the legal settlement charge incurred in Q1 2021[138] Income Taxes This section presents the benefit from income taxes on continuing operations and the effective tax rate Benefit from Income Taxes on Continuing Operations (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Benefit from income taxes on continuing operations | $(5,331) | $(21,757) | | Effective tax rate | 25.1% | 25.9% | Amount Attributable to Non-controlling Interests This section details the amount of net loss attributable to non-controlling interests and reasons for its change Amount Attributable to Non-controlling Interests (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Amount attributable to non-controlling interests | $(3,118) | $(872) | - The amount attributable to non-controlling interests increased by $2.2 million YoY, primarily due to net negative impacts from revisions in estimates on two projects in the prior year[141] Net Income (Loss) from Discontinued Operations This section explains the change in net income or loss from discontinued operations, including the Inliner sale gain - Net income (loss) from discontinued operations increased by $9.0 million YoY, driven by the gain on sale of Inliner and cessation of depreciation/amortization on WMS assets[142] Liquidity and Capital Resources This section discusses the company's cash flows, capital expenditures, debt covenants, and share repurchase program Capital Expenditures This section details capital expenditures for the period and provides an outlook for future spending Capital Expenditures (in millions) | Period | Total Capital Expenditures | | :-------------------------------- | :------------------------- | | Three months ended March 31, 2022 | $31.3 | | Three months ended March 31, 2021 | $18.8 | - Anticipates 2022 capital expenditures for continuing operations to be between approximately $100 million and $115 million[149] Cash Flows This section analyzes net cash provided by or used in operating, investing, and financing activities Net Cash Provided by (Used in) Activities (in thousands) | Activity | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Operating activities | $(50,180) | $38,087 | | Investing activities | $89,396 | $(16,303) | | Financing activities | $(82,904) | $(4,992) | - Cash used in operating activities increased by $88.3 million YoY, primarily due to changes in working capital[152] - Cash provided by investing activities increased by $105.7 million YoY, mainly due to proceeds from the sale of the Inliner business[154] - Cash used in financing activities increased by $77.9 million YoY, driven by the prepayment of $60.9 million of term loan and $20.2 million in common stock repurchases[155] Covenants and Events of Default This section confirms the company's compliance with credit agreement covenants, including leverage and interest coverage ratios - As of March 31, 2022, the Consolidated Leverage Ratio was 2.58 (max 3.00) and the Consolidated Interest Coverage Ratio was 6.07 (min 4.00), indicating compliance with credit agreement covenants[160] Share Repurchase Program This section details the new share repurchase authorization and the shares repurchased during the quarter - The Board authorized a new $300.0 million share repurchase program on February 1, 2022, replacing the 2016 authorization[161] - Repurchased 611,000 shares under the new authorization during Q1 2022, with $281.5 million remaining available[161] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section confirms no material change in the company's market risk exposure from the previous Annual Report disclosure - No material change in market risk exposure from previous Annual Report disclosure[163] Item 4. Controls and Procedures Management evaluated disclosure controls and procedures, concluding effectiveness, with no material changes in internal control over financial reporting - Disclosure controls and procedures were effective as of March 31, 2022[164] - No material changes in internal control over financial reporting during Q1 2022[165] PART II. OTHER INFORMATION This section includes legal proceedings, risk factors, equity sales, mine safety disclosures, and a list of exhibits Item 1. Legal Proceedings This section incorporates legal proceedings details by reference from Note 18 of the Condensed Consolidated Financial Statements - Legal proceedings information is incorporated by reference from Note 18 of the financial statements[166] Item 1A. Risk Factors This section confirms no material changes to the risk factors previously disclosed in the company's Annual Report - No material changes in risk factors from previous Annual Report disclosure[167] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details common stock repurchase activities, including shares purchased, average price, and remaining authorization Common Stock Repurchase Activity (Three Months Ended March 31, 2022) | Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | | :-------------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | | January 1, 2022 through January 31, 2022 | 72 | $38.89 | — | | February 1, 2022 through February 28, 2022 | 2,196 | $35.99 | — | | March 1, 2022 through March 31, 2022 | 663,612 | $30.35 | 611,000 | | Total | 665,880 | $30.37 | 611,000 | - The Board authorized a new $300.0 million share repurchase program on February 1, 2022, replacing the 2016 authorization[169] - As of March 31, 2022, $281.5 million of the 2022 authorization remained available[169] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are provided in Exhibit 95 of this Quarterly Report - Mine safety disclosures are provided in Exhibit 95 of the report[170] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements, certifications, and XBRL documents - Includes Purchase Agreement, Annual Incentive Plan, Certifications (302, 906), Mine Safety Disclosure, and Inline XBRL documents[171] SIGNATURES This section contains the signature of Elizabeth L. Curtis, EVP and CFO, certifying the report filing for Granite Construction - Report signed by Elizabeth L. Curtis, Executive Vice President and Chief Financial Officer, on April 28, 2022[174]