Granite(GVA) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Financial statements for June 30, 2025, show total assets at $3.11 billion, Q2 revenue at $1.13 billion, and net income significantly increased Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $3.11 billion, liabilities rose to $2.0 billion, and total equity reached $1.11 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $322,017 | $578,330 | | Receivables, net | $704,988 | $511,742 | | Total current assets | $1,691,615 | $1,716,663 | | Total assets | $3,105,991 | $3,025,655 | | Liabilities & Equity | | | | Total current liabilities | $1,076,151 | $1,031,959 | | Long-term debt | $733,039 | $737,939 | | Total liabilities | $1,991,636 | $1,946,292 | | Total equity | $1,114,355 | $1,079,363 | Condensed Consolidated Statements of Operations Q2 2025 revenue increased 4.0% to $1.13 billion, gross profit grew 20.9%, and net income attributable to Granite nearly doubled to $71.7 million Q2 and Six Months Ended June 30, 2025 vs 2024 (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,125,964 | $1,082,486 | $1,825,511 | $1,754,761 | | Gross Profit | $199,099 | $164,711 | $282,948 | $218,996 | | Operating Income | $103,565 | $85,821 | $63,814 | $42,521 | | Net Income Attributable to Granite | $71,700 | $36,895 | $38,044 | $5,912 | | Diluted EPS | $1.42 | $0.76 | $0.84 | $0.13 | Condensed Consolidated Statements of Cash Flows For H1 2025, operating cash flow was $5.4 million, investing activities used $207.3 million, and cash equivalents decreased by $256.3 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,438 | $22,084 | | Net cash used in investing activities | $(207,255) | $(50,122) | | Net cash used in financing activities | $(54,496) | $(22,879) | | Net decrease in cash and cash equivalents | $(256,313) | $(50,917) | | Cash and cash equivalents at end of period | $322,017 | $366,746 | Notes to the Condensed Consolidated Financial Statements Notes detail acquisitions of $540 million and $170 million, funded by a new $600 million revolver and $675 million term loans - Subsequent to the quarter end, on August 5, 2025, Granite completed two major acquisitions: Warren Paving for $540.0 million and Papich Construction for $170.0 million[25][26] - To fund the acquisitions and for general purposes, the company entered into a new Fifth Amended and Restated Credit Agreement on August 5, 2025, which provides for a $600.0 million revolving credit facility and up to $675.0 million in term loans[24][27] Impact of Revisions in Estimates on Gross Profit (Six Months Ended June 30, 2025, in millions) | Type of Revision | Number of Projects | Impact on Gross Profit | | :--- | :--- | :--- | | Upward Changes | 3 | $22.9 | | Downward Changes | 2 | $(21.1) | Segment Operating Income (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Construction | $130,982 | $105,006 | | Materials | $31,407 | $17,074 | | Total from reportable segments | $162,389 | $122,080 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Strong performance from public funding, 4.0% revenue growth, 15.5% gross margin, and $6.1 billion in Committed and Awarded Projects Current Economic Environment and Outlook Positive outlook supported by $1.2 trillion IIJA funding and a strong $6.1 billion Committed and Awarded Projects balance - The federal $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) has increased federal highway, bridge, and transit funding to its highest level in over six decades, driving an increase in project lettings[114] - The company's Committed and Awarded Projects (CAP) balance reached a strong $6.1 billion at the end of Q2 2025, supported by a positive public funding environment and strength in private markets[118] Results of Operations Q2 2025 revenue increased 4.0% to $1.13 billion, with gross profit margin improving to 17.7% due to better execution and higher volumes Revenue by Segment (Six Months Ended June 30, in thousands) | Segment | 2025 | % of Total | 2024 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Construction | $1,552,044 | 85.0% | $1,513,167 | 86.2% | | Materials | $273,467 | 15.0% | $241,594 | 13.8% | | Total | $1,825,511 | 100.0% | $1,754,761 | 100.0% | Gross Profit by Segment (Six Months Ended June 30) | Segment | Gross Profit 2025 (in thousands) | Margin 2025 | Gross Profit 2024 (in thousands) | Margin 2024 | | :--- | :--- | :--- | :--- | :--- | | Construction | $239,104 | 15.4% | $192,200 | 12.7% | | Materials | $43,844 | 16.0% | $26,796 | 11.1% | | Total | $282,948 | 15.5% | $218,996 | 12.5% | - SG&A expenses for the six months ended June 30, 2025 increased by $43.8 million compared to 2024, primarily due to an $18.1 million increase in stock-based compensation and $15.4 million in higher salaries and related expenses[136] Liquidity and Capital Resources Liquidity sources include $483.4 million in cash and a new credit agreement for $600 million revolver and $675 million term loans - On August 5, 2025, the company entered into a new A&R Credit Agreement, providing a $600.0 million revolver and a $600.0 million initial term loan, plus an additional $75.0 million delayed draw term loan[148] - Total cash, cash equivalents, and marketable securities stood at $483.4 million as of June 30, 2025, down from $585.6 million at year-end 2024[149] - Anticipated capital expenditures for 2025 are projected to be between $140 million and $160 million, including approximately $50 million for strategic materials investments[152] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material change in market risk exposure, except for investment portfolio diversification as detailed in Note 9 - As of June 30, 2025, there has been no material change in the company's exposure to market risk from what was disclosed in the 2024 Annual Report, with the exception of diversification of its investment portfolio[167] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[168] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[169] PART II. OTHER INFORMATION Item 1. Legal Proceedings Legal proceedings information is incorporated by reference from Note 17, with immaterial liabilities recorded as of June 30, 2025 - The company is involved in various legal proceedings in the ordinary course of business. Liabilities recorded for these proceedings were immaterial as of June 30, 2025[101][170] Item 1A. Risk Factors No material changes to risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been no material changes in the risk factors previously disclosed in the company's Annual Report[171] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities In Q2 2025, the company repurchased 2,518 shares at $88.86 per share, with $189.5 million remaining for authorization Share Repurchases in Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 202 | $76.33 | | May 2025 | 473 | $86.34 | | June 2025 | 1,843 | $90.88 | | Total | 2,518 | $88.86 | - As of June 30, 2025, approximately $189.5 million remained available for repurchase under the Board's $300.0 million authorization from February 2022[173]