Granite(GVA) - 2025 Q2 - Quarterly Results

Executive Summary & Key Highlights Granite reported strong financial results for Q2 and H1 2025, achieving record Committed and Awarded Projects and updating its full-year guidance to reflect strategic acquisitions Second Quarter 2025 Highlights Granite reported strong second quarter 2025 results with significant increases in net income and adjusted diluted EPS, achieving record CAP and updating guidance after strategic acquisitions - 2025 guidance raised to reflect acquisitions of Warren Paving and Papich Construction businesses[8] - Record Committed and Awarded Projects ("CAP") increased sequentially by $324 million to $6.1 billion[8] Second Quarter 2025 Key Financial Highlights | Metric | Q2 2025 | Q2 2024 | YoY Change | Source Chunk | | :-------------------------------- | :------ | :------ | :--------- | :----------- | | Net income attributable to Granite | $72M | $37M | +94.6% | 3 | | Diluted EPS | $1.42 | $0.76 | +86.8% | 3, 8 | | Adjusted net income attributable to Granite | $86M | $77M | +11.7% | 3 | | Adjusted diluted EPS | $1.93 | $1.73 | +11.6% | 3, 8 | | Revenue | $1.13B | $1.08B | +4% | 8, 9 | | Gross profit | $199M | $165M | +20.6% | 9 | | Adjusted EBITDA | $152M | $130M | +16.9% | 9 | Six Months Ended June 30, 2025 Highlights For the first six months of 2025, Granite demonstrated significant financial improvement, with net income attributable to Granite increasing substantially compared to the prior year, alongside healthy revenue, gross profit, and adjusted EBITDA growth Six Months Ended June 30, 2025 Key Financial Highlights | Metric | H1 2025 | H1 2024 | YoY Change | Source Chunk | | :-------------------------------- | :------ | :------ | :--------- | :----------- | | Net income attributable to Granite | $38M | $6M | +533.3% | 5 | | Diluted EPS | $0.84 | $0.13 | +546.2% | 5 | | Adjusted net income attributable to Granite | $87M | $68M | +27.9% | 5 | | Adjusted diluted EPS | $1.94 | $1.52 | +27.6% | 5 | | Revenue | $1.83B | $1.75B | +4.6% | 10 | | Gross profit | $283M | $219M | +29.2% | 10 | | Adjusted EBITDA | $180M | $144M | +25.0% | 10 | | Year-to-date operating cash flow | $5M | N/A | N/A | 10 | - Year-to-date operating cash flow of $5 million, positioned to achieve target of 9% operating cash flow as a percent of revenue for the year[10] Consolidated Financial Performance Granite's consolidated financial performance for both Q2 and H1 2025 showed robust year-over-year growth in revenue, gross profit, and net income Second Quarter 2025 Consolidated Results Granite's consolidated financial performance for the second quarter of 2025 showed robust growth across key metrics, with revenue increasing 4% year-over-year and gross profit seeing a significant increase, despite rising SG&A expenses Consolidated Statements of Operations (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | YoY Change | Source Chunk | | :--------------------------------------- | :------------------ | :------------------ | :--------- | :----------- | | Revenue | $1,125,964 | $1,082,486 | +4.0% | 27 | | Cost of revenue | $926,865 | $917,775 | +1.0% | 27 | | Gross profit | $199,099 | $164,711 | +20.9% | 27 | | Selling, general and administrative expenses | $85,887 | $70,052 | +22.6% | 27 | | Operating income | $103,565 | $85,821 | +20.7% | 27 | | Income before income taxes | $107,559 | $59,550 | +80.6% | 27 | | Net income attributable to Granite | $71,700 | $36,895 | +94.3% | 27 | | Diluted EPS | $1.42 | $0.76 | +86.8% | 27 | - SG&A expenses increased $16 million to $86 million (7.6% of revenue) from $70 million (6.5% of revenue) in the prior year, primarily due to additional salaries, related expenses, and a greater percentage of annual incentive compensation[9] Six Months Ended June 30, 2025 Consolidated Results For the first half of 2025, Granite's consolidated results demonstrated strong growth, with revenue increasing by $71 million and gross profit by $64 million year-over-year, leading to a more than doubled operating income and substantial net income growth Consolidated Statements of Operations (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | YoY Change | Source Chunk | | :--------------------------------------- | :------------------ | :------------------ | :--------- | :----------- | | Revenue | $1,825,511 | $1,754,761 | +4.0% | 27 | | Cost of revenue | $1,542,563 | $1,535,765 | +0.4% | 27 | | Gross profit | $282,948 | $218,996 | +29.2% | 27 | | Selling, general and administrative expenses | $201,798 | $158,045 | +27.7% | 27 | | Operating income | $63,814 | $42,521 | +50.1% | 27 | | Income before income taxes | $67,476 | $20,582 | +227.8% | 27 | | Net income attributable to Granite | $38,044 | $5,912 | +543.5% | 27 | | Diluted EPS | $0.84 | $0.13 | +546.2% | 27 | - SG&A expenses increased $44 million to $202 million (11.1% of revenue) from $158 million (9.0% of revenue) in the prior year, primarily due to additional stock-based compensation, salaries, and a greater percentage of annual incentive compensation[10] Segment Performance Review Granite's Construction and Materials segments both demonstrated strong year-over-year growth in revenue and gross profit, driven by acquisitions, improved execution, and higher volumes Construction Segment Performance The Construction segment experienced year-over-year revenue growth, primarily driven by the newly acquired Dickerson & Bowen business, with increased gross profit due to improved project execution and favorable claim settlements, and record CAP indicating strong future organic growth potential - Revenue increased year-over-year, primarily driven by the newly acquired Dickerson & Bowen business. Legacy business revenue was consistent and is expected to accelerate in the second half of the year[13] - Gross profit increased year-over-year due to improved project execution across a higher quality project portfolio and favorable claim settlements[13] - CAP increased $324 million sequentially to $6.1 billion and $488 million year-over-year, with a robust bidding pipeline in both public and private markets[14] Construction Segment Financials (Three & Six Months Ended June 30, in thousands) | Metric | Q2 2025 | Q2 2024 | Q2 YoY Change | H1 2025 | H1 2024 | H1 YoY Change | Source Chunk | | :------- | :--------------------- | :--------------------- | :------------ | :--------------------- | :--------------------- | :------------ | :----------- | | Revenue | $937,426 | $917,954 | +2.1% | $1,552,044 | $1,513,167 | +2.6% | 11 | | Gross profit | $153,666 | $135,372 | +13.5% | $239,104 | $192,200 | +24.4% | 11 | | Gross profit as a percent of revenue | 16.4% | 14.7% | +1.7 pp | 15.4% | 12.7% | +2.7 pp | 11 | Materials Segment Performance The Materials segment demonstrated strong year-over-year improvements in revenue, gross profit, and cash gross profit for both the second quarter and the first six months of 2025, primarily driven by higher aggregates and asphalt volumes and increased aggregate sales prices - Revenue, gross profit, and cash gross profit improved year-over-year primarily driven by higher aggregates and asphalt volumes and higher aggregate sales prices[16] Materials Segment Financials (Three & Six Months Ended June 30, in thousands) | Metric | Q2 2025 | Q2 2024 | Q2 YoY Change | H1 2025 | H1 2024 | H1 YoY Change | Source Chunk | | :-------------------------------- | :--------------------- | :--------------------- | :------------ | :--------------------- | :--------------------- | :------------ | :----------- | | Revenue | $188,538 | $164,532 | +14.6% | $273,467 | $241,594 | +13.2% | 15 | | Gross profit | $45,433 | $29,339 | +54.9% | $43,844 | $26,796 | +63.6% | 15 | | Gross profit as a percent of revenue | 24.1% | 17.8% | +6.3 pp | 16.0% | 11.1% | +4.9 pp | 15 | | Cash gross profit | $59,001 | $39,300 | +50.1% | $69,478 | $46,516 | +49.4% | 15 | | Cash gross profit as a % of revenue | 31.3% | 23.9% | +7.4 pp | 25.4% | 19.3% | +6.1 pp | 15 | Materials Product Line Performance (Three Months Ended June 30, 2025) In Q2 2025, the Materials segment's Aggregate product line saw increased sales tons and average selling price, contributing to higher gross profit and cash gross profit, while the Asphalt product line also experienced growth in sales tons, leading to improved gross profit and cash gross profit Materials Product Line Performance (Q2 2025 vs. Q2 2024, in thousands) | Metric | Aggregate Q2 2025 | Aggregate Q2 2024 | Asphalt Q2 2025 | Asphalt Q2 2024 | Source Chunk | | :-------------------------- | :------------------ | :------------------ | :---------------- | :---------------- | :----------- | | External revenue | $59,643 | $54,347 | $128,625 | $109,372 | 41 | | Sales tons | 6,299 | 5,658 | 2,329 | 2,163 | 41 | | Average selling price per ton | $16.76 | $16.36 | $79.85 | $79.49 | 41 | | Gross profit | $24,869 | $23,014 | $29,770 | $26,593 | 41 | | Gross profit as a % of revenue | 23.6% | 24.9% | 16.0% | 15.5% | 41 | | Cash gross profit | $34,299 | $29,574 | $33,830 | $29,270 | 41 | | Cash gross profit as a % of revenue | 32.5% | 31.9% | 18.2% | 17.0% | 41 | Materials Product Line Performance (Six Months Ended June 30, 2025) For the first six months of 2025, both Aggregate and Asphalt product lines within the Materials segment showed increased external revenue, sales tons, and improved gross and cash gross profits compared to the prior year, contributing to the segment's overall strong performance Materials Product Line Performance (H1 2025 vs. H1 2024, in thousands) | Metric | Aggregate H1 2025 | Aggregate H1 2024 | Asphalt H1 2025 | Asphalt H1 2024 | Source Chunk | | :-------------------------- | :------------------ | :------------------ | :---------------- | :---------------- | :----------- | | External revenue | $100,045 | $90,436 | $173,063 | $150,185 | 43 | | Sales tons | 10,067 | 8,886 | 3,062 | 2,712 | 43 | | Average selling price per ton | $16.34 | $15.86 | $80.81 | $80.88 | 43 | | Gross profit | $28,609 | $20,904 | $26,966 | $22,014 | 43 | | Gross profit as a % of revenue | 17.4% | 14.8% | 10.9% | 10.0% | 43 | | Cash gross profit | $46,359 | $34,585 | $34,696 | $27,903 | 43 | | Cash gross profit as a % of revenue | 28.2% | 24.5% | 14.0% | 12.7% | 43 | Outlook and Strategic Initiatives Granite updated its 2025 fiscal year guidance to reflect recent strategic acquisitions, which are expected to enhance adjusted EBITDA margin and cash flows 2025 Fiscal Year Guidance Update Granite has updated its 2025 fiscal year guidance to incorporate the impact of recent acquisitions, projecting increased revenue and an improved adjusted EBITDA margin, while SG&A expenses and the effective tax rate remain consistent with previous estimates Updated 2025 Fiscal Year Guidance | Metric | Guidance Range | Notes | Source Chunk | | :-------------------------- | :------------- | :------ | :----------- | | Revenue | $4.35B - $4.55B | Includes ~$150M from new acquisitions | 21 | | Adjusted EBITDA margin | 11.25% - 12.25% | Increased | 21 | | SG&A expense | ~9.0% of revenue | Unchanged, includes ~$40M stock-based compensation | 21 | | Effective tax rate for adjusted net income | Mid-20s | Unchanged | 21 | | Capital expenditures | $140M - $160M | Unchanged | 21 | Strategic Acquisitions and Capital Allocation Granite's recent acquisitions of Warren Paving and Papich Construction are aligned with its capital allocation strategy to invest in high-quality businesses that strengthen and expand home markets, expected to be immediately accretive to adjusted EBITDA margin and cash flows, with the company well-positioned for future M&A opportunities - Two acquisitions announced: one in the Southeast providing significant aggregate supply on the Mississippi River, and another in California strengthening business with additional aggregates and a leading civil construction business[4] - Acquisitions are in alignment with capital allocation strategy to invest in high-quality businesses that strengthen and expand home markets and are immediately accretive to adjusted EBITDA margin and cash flows[18] - Pro-forma leverage is well within target, and an expanded credit facility positions the company to act on future M&A opportunities[18] Corporate Information This section provides an overview of Granite's identity, details regarding its Q2 2025 conference call, and important disclaimers about forward-looking statements About Granite Granite Construction Incorporated, established in 1922, is a leading diversified vertically-integrated civil contractor and construction materials producer in the United States, guided by its Code of Conduct and Core Values emphasizing safety, quality, and sustainability - Granite is America's Infrastructure Company™, one of the largest diversified vertically-integrated civil contractors and construction materials producers in the United States[20] - The company's Code of Conduct and strong Core Values guide its operations, upholding high ethical standards and leadership in safety, quality, and sustainability[20] Conference Call Details Granite hosted a conference call on August 7, 2025, to discuss its second quarter 2025 results, with investors able to access a live audio webcast or dial-in, and replays available for a limited period - Conference call held on August 7, 2025, at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time to discuss Q2 2025 results[19] - Live audio webcast available on the Investor Relations website (https://investor.graniteconstruction.com) and via dial-in[19] - An archive of the webcast and a replay were available after the live call through August 14, 2025[19] Forward-Looking Statements This section serves as a cautionary statement regarding forward-looking statements within the news release, highlighting that such statements are based on management's current beliefs and estimates, involve inherent risks and uncertainties, and may not be realized, advising readers not to place undue reliance on them - Statements not based on historical facts, including future events, performance, growth, and 2025 fiscal year guidance, constitute forward-looking statements[22] - These statements are based on management's current beliefs, assumptions, and estimates, which may not be realized due to numerous risks and uncertainties beyond the company's control[22] - Readers are cautioned not to place undue reliance on forward-looking statements, and the company undertakes no obligation to revise or update them, except as required by law[23] Condensed Consolidated Financial Statements This section presents Granite's condensed consolidated balance sheets, statements of operations, and cash flows, highlighting key financial positions and performance for the periods presented Condensed Consolidated Balance Sheets The condensed consolidated balance sheets show Granite's financial position as of June 30, 2025, compared to December 31, 2024, with total assets increasing slightly due to higher receivables and long-term marketable securities, while cash and cash equivalents decreased and total liabilities rose Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | ASSETS | | | | | Cash and cash equivalents | $322,017 | $578,330 | -$256,313 | | Total current assets | $1,691,615 | $1,716,663 | -$25,048 | | Total assets | $3,105,991 | $3,025,655 | +$80,336 | | LIABILITIES AND EQUITY | | | | | Total current liabilities | $1,076,151 | $1,031,959 | +$44,192 | | Total liabilities and equity | $3,105,991 | $3,025,655 | +$80,336 | | Total Granite Construction Incorporated shareholders' equity | $1,062,748 | $1,015,226 | +$47,522 | | Total equity | $1,114,355 | $1,079,363 | +$34,992 | - Receivables, net increased from $511,742 thousand at December 31, 2024, to $704,988 thousand at June 30, 2025[25] - Long-term marketable securities increased from $0 at December 31, 2024, to $98,069 thousand at June 30, 2025[25] Condensed Consolidated Statements of Operations The condensed consolidated statements of operations highlight significant year-over-year improvements for both the three and six months ended June 30, 2025, with increased revenue and gross profit leading to substantial growth in operating income and net income attributable to Granite, despite higher SG&A expenses Condensed Consolidated Statements of Operations (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | Source Chunk | | :--------------------------------------- | :------ | :------ | :------ | :------ | :----------- | | Revenue | $1,125,964 | $1,082,486 | $1,825,511 | $1,754,761 | 27 | | Gross profit | $199,099 | $164,711 | $282,948 | $218,996 | 27 | | Selling, general and administrative expenses | $85,887 | $70,052 | $201,798 | $158,045 | 27 | | Operating income | $103,565 | $85,821 | $63,814 | $42,521 | 27 | | Income before income taxes | $107,559 | $59,550 | $67,476 | $20,582 | 27 | | Net income | $80,345 | $38,857 | $52,018 | $9,415 | 27 | | Net income attributable to Granite | $71,700 | $36,895 | $38,044 | $5,912 | 27 | | Diluted EPS | $1.42 | $0.76 | $0.84 | $0.13 | 27 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, Granite reported net cash provided by operating activities of $5.4 million, a decrease from the prior year, with significant net cash outflows from investing activities due to marketable securities and property purchases, and cash used in financing activities for debt repayments and distributions Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | Change | | :-------------------------------- | :----- | :----- | :----- | | Net cash provided by operating activities | $5,438 | $22,084 | -$16,646 | | Net cash used in investing activities | $(207,255) | $(50,122) | -$157,133 | | Net cash used in financing activities | $(54,496) | $(22,879) | -$31,617 | | Net decrease in cash and cash equivalents | $(256,313) | $(50,917) | -$205,396 | | Cash and cash equivalents at end of period | $322,017 | $366,746 | -$44,729 | - Purchases of marketable securities amounted to $172,578 thousand in H1 2025, compared to none in H1 2024[29] - Stock-based compensation increased significantly from $15,084 thousand in H1 2024 to $34,632 thousand in H1 2025[29] Non-GAAP Financial Measures and Reconciliations This section defines Granite's non-GAAP financial measures and provides reconciliations to their most directly comparable GAAP measures, offering additional insights into operational performance Non-GAAP Measures Description Granite provides several non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Adjusted Net Income, and Materials segment cash gross profit, to offer additional insights into its operating performance, used by management and investors to facilitate comparisons and evaluate performance by excluding certain non-recurring or non-cash items, but not intended as substitutes for GAAP results - Non-GAAP measures like EBITDA and EBITDA margin are useful for evaluating operating performance and facilitating comparisons between companies with different capital structures and tax rates[30] - Adjusted EBITDA and Adjusted EBITDA margin exclude the impact of stock-based compensation, loss on debt extinguishment, and other costs (legal fees, reorganization, acquisition/integration expenses, impairment charges)[30] - Materials segment cash gross profit excludes depreciation, depletion, and amortization to better illustrate operational performance from segment assets[31] - Non-GAAP measures are provided in addition to, not as alternatives for, GAAP results and may not be comparable to similar measures used by other companies[32] EBITDA and Adjusted EBITDA Reconciliation The reconciliation of GAAP net income to EBITDA and Adjusted EBITDA demonstrates the impact of non-operating and non-cash items on the company's profitability, with both EBITDA and Adjusted EBITDA showing significant year-over-year increases for the three and six months ended June 30, 2025, reflecting improved operational performance after adjustments EBITDA and Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | Source Chunk | | :-------------------------- | :------ | :------ | :------ | :------ | :----------- | | Net income attributable to Granite | $71,700 | $36,895 | $38,044 | $5,912 | 35 | | EBITDA | $136,758 | $89,628 | $123,187 | $79,773 | 35 | | EBITDA margin | 12.1% | 8.3% | 6.7% | 4.5% | 35 | | Adjusted EBITDA | $152,426 | $129,866 | $180,498 | $143,916 | 35 | | Adjusted EBITDA margin | 13.5% | 12.0% | 9.9% | 8.2% | 35 | - Adjustments for Adjusted EBITDA include other costs, net ($13.3M in Q2 2025), stock-based compensation ($2.4M in Q2 2025), and loss on debt extinguishment (none in Q2 2025, $27.8M in Q2 2024)[35] Adjusted Net Income Reconciliation The adjusted net income reconciliation provides a clearer view of Granite's underlying profitability by removing the impact of specific non-GAAP adjustments such as other costs, transaction costs, stock-based compensation, and loss on debt extinguishment, resulting in higher adjusted net income and adjusted diluted EPS compared to GAAP figures for both periods Adjusted Net Income Reconciliation (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | Source Chunk | | :--------------------------------------- | :------ | :------ | :------ | :------ | :----------- | | Income before income taxes | $107,559 | $59,550 | $67,476 | $20,582 | 38 | | Adjusted income before income taxes | $127,219 | $104,101 | $132,766 | $94,665 | 38 | | Net income attributable to Granite | $71,700 | $36,895 | $38,044 | $5,912 | 38 | | Adjusted net income attributable to Granite | $86,298 | $76,977 | $86,522 | $67,848 | 38 | | Diluted net income per share attributable to common shareholders | $1.42 | $0.76 | $0.84 | $0.13 | 38 | | Adjusted diluted earnings per share attributable to common shareholders | $1.93 | $1.73 | $1.94 | $1.52 | 38 | - Adjusting items include other costs, net, transaction costs, stock-based compensation, and loss on debt extinguishment, which are added back to GAAP income before income taxes[38] - The dilutive effect of convertible notes is removed for adjusted diluted EPS calculation to reflect the impact of capped call transactions[39]